Correlation Between TG Therapeutics and Reata Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both TG Therapeutics and Reata 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 TG Therapeutics and Reata Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TG Therapeutics and Reata Pharmaceuticals, you can compare the effects of market volatilities on TG Therapeutics and Reata 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 TG Therapeutics with a short position of Reata Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of TG Therapeutics and Reata Pharmaceuticals.
Diversification Opportunities for TG Therapeutics and Reata Pharmaceuticals
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between TGTX and Reata is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding TG Therapeutics and Reata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reata Pharmaceuticals and TG 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 TG Therapeutics are associated (or correlated) with Reata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reata Pharmaceuticals has no effect on the direction of TG Therapeutics i.e., TG Therapeutics and Reata Pharmaceuticals go up and down completely randomly.
Pair Corralation between TG Therapeutics and Reata Pharmaceuticals
Given the investment horizon of 90 days TG Therapeutics is expected to generate 7.0 times less return on investment than Reata Pharmaceuticals. But when comparing it to its historical volatility, TG Therapeutics is 3.72 times less risky than Reata Pharmaceuticals. It trades about 0.05 of its potential returns per unit of risk. Reata Pharmaceuticals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,214 in Reata Pharmaceuticals on November 2, 2024 and sell it today you would earn a total of 6,753 from holding Reata Pharmaceuticals or generate 160.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 22.67% |
| Values | Daily Returns |
TG Therapeutics vs. Reata Pharmaceuticals
Performance |
| Timeline |
| TG Therapeutics |
| Reata Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
TG Therapeutics and Reata Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TG Therapeutics and Reata Pharmaceuticals
The main advantage of trading using opposite TG Therapeutics and Reata Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TG Therapeutics position performs unexpectedly, Reata 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 Reata Pharmaceuticals will offset losses from the drop in Reata Pharmaceuticals' long position.| TG Therapeutics vs. Madrigal Pharmaceuticals | TG Therapeutics vs. Terns Pharmaceuticals | TG Therapeutics vs. Hepion Pharmaceuticals | TG Therapeutics vs. Exelixis |
| Reata Pharmaceuticals vs. Sarepta Therapeutics | Reata Pharmaceuticals vs. Krystal Biotech | Reata Pharmaceuticals vs. PTC Therapeutics | Reata Pharmaceuticals vs. Madrigal 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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