Correlation Between Viking Therapeutics and Verastem
Can any of the company-specific risk be diversified away by investing in both Viking Therapeutics and Verastem 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 Viking Therapeutics and Verastem into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viking Therapeutics and Verastem, you can compare the effects of market volatilities on Viking Therapeutics and Verastem 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 Viking Therapeutics with a short position of Verastem. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viking Therapeutics and Verastem.
Diversification Opportunities for Viking Therapeutics and Verastem
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Viking and Verastem is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Viking Therapeutics and Verastem in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verastem and Viking 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 Viking Therapeutics are associated (or correlated) with Verastem. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verastem has no effect on the direction of Viking Therapeutics i.e., Viking Therapeutics and Verastem go up and down completely randomly.
Pair Corralation between Viking Therapeutics and Verastem
Given the investment horizon of 90 days Viking Therapeutics is expected to under-perform the Verastem. But the stock apears to be less risky and, when comparing its historical volatility, Viking Therapeutics is 1.54 times less risky than Verastem. The stock trades about -0.09 of its potential returns per unit of risk. The Verastem is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 242.00 in Verastem on November 2, 2024 and sell it today you would earn a total of 380.00 from holding Verastem or generate 157.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Viking Therapeutics vs. Verastem
Performance |
| Timeline |
| Viking Therapeutics |
| Verastem |
Viking Therapeutics and Verastem Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Viking Therapeutics and Verastem
The main advantage of trading using opposite Viking Therapeutics and Verastem positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viking Therapeutics position performs unexpectedly, Verastem 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 Verastem will offset losses from the drop in Verastem's long position.| Viking Therapeutics vs. Terns Pharmaceuticals | Viking Therapeutics vs. Akero Therapeutics | Viking Therapeutics vs. Madrigal Pharmaceuticals | Viking Therapeutics vs. Sarepta 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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