Correlation Between Seagen and Insmed
Can any of the company-specific risk be diversified away by investing in both Seagen and Insmed 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 Insmed into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seagen Inc and Insmed Inc, you can compare the effects of market volatilities on Seagen and Insmed 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 Insmed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seagen and Insmed.
Diversification Opportunities for Seagen and Insmed
Very weak diversification
The 3 months correlation between Seagen and Insmed is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Seagen Inc and Insmed Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insmed Inc 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 Insmed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insmed Inc has no effect on the direction of Seagen i.e., Seagen and Insmed go up and down completely randomly.
Pair Corralation between Seagen and Insmed
Given the investment horizon of 90 days Seagen is expected to generate 1.15 times less return on investment than Insmed. But when comparing it to its historical volatility, Seagen Inc is 2.69 times less risky than Insmed. It trades about 0.15 of its potential returns per unit of risk. Insmed Inc is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,168 in Insmed Inc on August 27, 2024 and sell it today you would earn a total of 5,147 from holding Insmed Inc or generate 237.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 25.71% |
| Values | Daily Returns |
Seagen Inc vs. Insmed Inc
Performance |
| Timeline |
| Seagen Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Insmed Inc |
Seagen and Insmed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seagen and Insmed
The main advantage of trading using opposite Seagen and Insmed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagen position performs unexpectedly, Insmed 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 Insmed will offset losses from the drop in Insmed's long position.| Seagen vs. Biomarin Pharmaceutical | Seagen vs. Alnylam Pharmaceuticals | Seagen vs. Exelixis | Seagen vs. Halozyme Therapeutics |
| Insmed vs. Ascendis Pharma AS | Insmed vs. Apellis Pharmaceuticals | Insmed vs. BeiGene | Insmed vs. Akero Therapeutics |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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