Correlation Between Terns Pharmaceuticals and Lexicon Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Terns Pharmaceuticals and Lexicon 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 Terns Pharmaceuticals and Lexicon Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Terns Pharmaceuticals and Lexicon Pharmaceuticals, you can compare the effects of market volatilities on Terns Pharmaceuticals and Lexicon 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 Terns Pharmaceuticals with a short position of Lexicon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Terns Pharmaceuticals and Lexicon Pharmaceuticals.
Diversification Opportunities for Terns Pharmaceuticals and Lexicon Pharmaceuticals
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Terns and Lexicon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Terns Pharmaceuticals and Lexicon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lexicon Pharmaceuticals and Terns Pharmaceuticals 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 Terns Pharmaceuticals are associated (or correlated) with Lexicon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lexicon Pharmaceuticals has no effect on the direction of Terns Pharmaceuticals i.e., Terns Pharmaceuticals and Lexicon Pharmaceuticals go up and down completely randomly.
Pair Corralation between Terns Pharmaceuticals and Lexicon Pharmaceuticals
Given the investment horizon of 90 days Terns Pharmaceuticals is expected to generate 0.85 times more return on investment than Lexicon Pharmaceuticals. However, Terns Pharmaceuticals is 1.17 times less risky than Lexicon Pharmaceuticals. It trades about 0.0 of its potential returns per unit of risk. Lexicon Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest 940.00 in Terns Pharmaceuticals on November 2, 2024 and sell it today you would lose (492.00) from holding Terns Pharmaceuticals or give up 52.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Terns Pharmaceuticals vs. Lexicon Pharmaceuticals
Performance |
| Timeline |
| Terns Pharmaceuticals |
| Lexicon Pharmaceuticals |
Terns Pharmaceuticals and Lexicon Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Terns Pharmaceuticals and Lexicon Pharmaceuticals
The main advantage of trading using opposite Terns Pharmaceuticals and Lexicon Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Terns Pharmaceuticals position performs unexpectedly, Lexicon 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 Lexicon Pharmaceuticals will offset losses from the drop in Lexicon Pharmaceuticals' long position.| Terns Pharmaceuticals vs. Amylyx Pharmaceuticals | Terns Pharmaceuticals vs. Acumen Pharmaceuticals | Terns Pharmaceuticals vs. Inozyme Pharma | Terns Pharmaceuticals vs. X4 Pharmaceuticals |
| Lexicon Pharmaceuticals vs. BioLineRx | Lexicon Pharmaceuticals vs. Ardelyx | Lexicon Pharmaceuticals vs. Seres Therapeutics | Lexicon Pharmaceuticals vs. Immunitybio |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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