Correlation Between Seagen and Alector
Can any of the company-specific risk be diversified away by investing in both Seagen and Alector at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Seagen and Alector into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seagen Inc and Alector, you can compare the effects of market volatilities on Seagen and Alector and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Seagen with a short position of Alector. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagen and Alector.
Diversification Opportunities for Seagen and Alector
Significant diversification
The 3 months correlation between Seagen and Alector is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Seagen Inc and Alector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alector and Seagen is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Seagen Inc are associated (or correlated) with Alector. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alector has no effect on the direction of Seagen i.e., Seagen and Alector go up and down completely randomly.
Pair Corralation between Seagen and Alector
Given the investment horizon of 90 days Seagen Inc is expected to generate 0.48 times more return on investment than Alector. However, Seagen Inc is 2.07 times less risky than Alector. It trades about 0.15 of its potential returns per unit of risk. Alector is currently generating about -0.02 per unit of risk. If you would invest 13,600 in Seagen Inc on August 27, 2024 and sell it today you would earn a total of 6,023 from holding Seagen Inc or generate 44.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 25.71% |
| Values | Daily Returns |
Seagen Inc vs. Alector
Performance |
| Timeline |
| Seagen Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Alector |
Seagen and Alector Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seagen and Alector
The main advantage of trading using opposite Seagen and Alector positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagen position performs unexpectedly, Alector can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alector will offset losses from the drop in Alector's long position.| Seagen vs. Biomarin Pharmaceutical | Seagen vs. Alnylam Pharmaceuticals | Seagen vs. Exelixis | Seagen vs. Halozyme Therapeutics |
| Alector vs. Eliem Therapeutics | Alector vs. HCW Biologics | Alector vs. Scpharmaceuticals | Alector vs. Milestone Pharmaceuticals |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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