Correlation Between Vanda Pharmaceuticals and Viking Therapeutics
Can any of the company-specific risk be diversified away by investing in both Vanda Pharmaceuticals and Viking Therapeutics 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 Vanda Pharmaceuticals and Viking Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanda Pharmaceuticals and Viking Therapeutics, you can compare the effects of market volatilities on Vanda Pharmaceuticals and Viking Therapeutics 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 Vanda Pharmaceuticals with a short position of Viking Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanda Pharmaceuticals and Viking Therapeutics.
Diversification Opportunities for Vanda Pharmaceuticals and Viking Therapeutics
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanda and Viking is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Vanda Pharmaceuticals and Viking Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viking Therapeutics and Vanda 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 Vanda Pharmaceuticals are associated (or correlated) with Viking Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viking Therapeutics has no effect on the direction of Vanda Pharmaceuticals i.e., Vanda Pharmaceuticals and Viking Therapeutics go up and down completely randomly.
Pair Corralation between Vanda Pharmaceuticals and Viking Therapeutics
Given the investment horizon of 90 days Vanda Pharmaceuticals is expected to generate 0.53 times more return on investment than Viking Therapeutics. However, Vanda Pharmaceuticals is 1.88 times less risky than Viking Therapeutics. It trades about 0.25 of its potential returns per unit of risk. Viking Therapeutics is currently generating about -0.25 per unit of risk. If you would invest 456.00 in Vanda Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of 63.00 from holding Vanda Pharmaceuticals or generate 13.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanda Pharmaceuticals vs. Viking Therapeutics
Performance |
| Timeline |
| Vanda Pharmaceuticals |
| Viking Therapeutics |
Vanda Pharmaceuticals and Viking Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanda Pharmaceuticals and Viking Therapeutics
The main advantage of trading using opposite Vanda Pharmaceuticals and Viking Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanda Pharmaceuticals position performs unexpectedly, Viking Therapeutics 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 Viking Therapeutics will offset losses from the drop in Viking Therapeutics' long position.| Vanda Pharmaceuticals vs. Biomarin Pharmaceutical | Vanda Pharmaceuticals vs. Vaxcyte | Vanda Pharmaceuticals vs. Liquidia Technologies | Vanda Pharmaceuticals vs. Legend Biotech Corp |
| Viking Therapeutics vs. Cue Biopharma | Viking Therapeutics vs. Eliem Therapeutics | Viking Therapeutics vs. Inhibrx | Viking Therapeutics vs. Molecular Partners AG |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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