Correlation Between Summit Therapeutics and Invesco Mortgage
Can any of the company-specific risk be diversified away by investing in both Summit Therapeutics and Invesco Mortgage 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 Summit Therapeutics and Invesco Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Summit Therapeutics PLC and Invesco Mortgage Capital, you can compare the effects of market volatilities on Summit Therapeutics and Invesco Mortgage 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 Summit Therapeutics with a short position of Invesco Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Therapeutics and Invesco Mortgage.
Diversification Opportunities for Summit Therapeutics and Invesco Mortgage
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Invesco is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Summit Therapeutics PLC and Invesco Mortgage Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Mortgage Capital and Summit Therapeutics 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 Summit Therapeutics PLC are associated (or correlated) with Invesco Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Mortgage Capital has no effect on the direction of Summit Therapeutics i.e., Summit Therapeutics and Invesco Mortgage go up and down completely randomly.
Pair Corralation between Summit Therapeutics and Invesco Mortgage
Given the investment horizon of 90 days Summit Therapeutics PLC is expected to generate 10.57 times more return on investment than Invesco Mortgage. However, Summit Therapeutics is 10.57 times more volatile than Invesco Mortgage Capital. It trades about 0.01 of its potential returns per unit of risk. Invesco Mortgage Capital is currently generating about -0.14 per unit of risk. If you would invest 1,831 in Summit Therapeutics PLC on October 16, 2024 and sell it today you would lose (13.00) from holding Summit Therapeutics PLC or give up 0.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 74.36% |
| Values | Daily Returns |
Summit Therapeutics PLC vs. Invesco Mortgage Capital
Performance |
| Timeline |
| Summit Therapeutics PLC |
| Invesco Mortgage Capital |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Summit Therapeutics and Invesco Mortgage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Summit Therapeutics and Invesco Mortgage
The main advantage of trading using opposite Summit Therapeutics and Invesco Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Therapeutics position performs unexpectedly, Invesco Mortgage 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 Invesco Mortgage will offset losses from the drop in Invesco Mortgage's long position.| Summit Therapeutics vs. Nkarta Inc | Summit Therapeutics vs. Cullinan Oncology LLC | Summit Therapeutics vs. Kezar Life Sciences | Summit Therapeutics vs. Kronos Bio |
| Invesco Mortgage vs. Datadog | Invesco Mortgage vs. Summit Therapeutics PLC | Invesco Mortgage vs. Valneva SE ADR | Invesco Mortgage vs. ServiceNow |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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