Correlation Between Sarepta Therapeutics and ACADIA Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Sarepta Therapeutics and ACADIA Pharmaceuticals 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 Sarepta Therapeutics and ACADIA Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarepta Therapeutics and ACADIA Pharmaceuticals, you can compare the effects of market volatilities on Sarepta Therapeutics and ACADIA Pharmaceuticals 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 Sarepta Therapeutics with a short position of ACADIA Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarepta Therapeutics and ACADIA Pharmaceuticals.
Diversification Opportunities for Sarepta Therapeutics and ACADIA Pharmaceuticals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sarepta and ACADIA is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Sarepta Therapeutics and ACADIA Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACADIA Pharmaceuticals and Sarepta 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 Sarepta Therapeutics are associated (or correlated) with ACADIA Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACADIA Pharmaceuticals has no effect on the direction of Sarepta Therapeutics i.e., Sarepta Therapeutics and ACADIA Pharmaceuticals go up and down completely randomly.
Pair Corralation between Sarepta Therapeutics and ACADIA Pharmaceuticals
Given the investment horizon of 90 days Sarepta Therapeutics is expected to generate 1.2 times more return on investment than ACADIA Pharmaceuticals. However, Sarepta Therapeutics is 1.2 times more volatile than ACADIA Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. ACADIA Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest 13,510 in Sarepta Therapeutics on August 31, 2024 and sell it today you would earn a total of 284.00 from holding Sarepta Therapeutics or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarepta Therapeutics vs. ACADIA Pharmaceuticals
Performance |
| Timeline |
| Sarepta Therapeutics |
| ACADIA Pharmaceuticals |
Sarepta Therapeutics and ACADIA Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarepta Therapeutics and ACADIA Pharmaceuticals
The main advantage of trading using opposite Sarepta Therapeutics and ACADIA Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarepta Therapeutics position performs unexpectedly, ACADIA Pharmaceuticals 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 ACADIA Pharmaceuticals will offset losses from the drop in ACADIA Pharmaceuticals' long position.| Sarepta Therapeutics vs. Krystal Biotech | Sarepta Therapeutics vs. PTC Therapeutics | Sarepta Therapeutics vs. Iovance Biotherapeutics | Sarepta Therapeutics vs. Madrigal Pharmaceuticals |
| ACADIA Pharmaceuticals vs. Madrigal Pharmaceuticals | ACADIA Pharmaceuticals vs. Viking Therapeutics | ACADIA Pharmaceuticals vs. Sarepta Therapeutics | ACADIA Pharmaceuticals vs. Hepion 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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