Correlation Between Verastem and Infinity Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Verastem and Infinity 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 Verastem and Infinity Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and Infinity Pharmaceuticals, you can compare the effects of market volatilities on Verastem and Infinity 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 Verastem with a short position of Infinity Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and Infinity Pharmaceuticals.
Diversification Opportunities for Verastem and Infinity Pharmaceuticals
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Verastem and Infinity is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Infinity Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Infinity Pharmaceuticals and Verastem 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 Verastem are associated (or correlated) with Infinity Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Infinity Pharmaceuticals has no effect on the direction of Verastem i.e., Verastem and Infinity Pharmaceuticals go up and down completely randomly.
Pair Corralation between Verastem and Infinity Pharmaceuticals
Given the investment horizon of 90 days Verastem is expected to generate 0.9 times more return on investment than Infinity Pharmaceuticals. However, Verastem is 1.11 times less risky than Infinity Pharmaceuticals. It trades about 0.03 of its potential returns per unit of risk. Infinity Pharmaceuticals is currently generating about -0.08 per unit of risk. If you would invest 652.00 in Verastem on September 3, 2024 and sell it today you would lose (118.00) from holding Verastem or give up 18.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 28.0% |
| Values | Daily Returns |
Verastem vs. Infinity Pharmaceuticals
Performance |
| Timeline |
| Verastem |
| Infinity Pharmaceuticals |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Verastem and Infinity Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and Infinity Pharmaceuticals
The main advantage of trading using opposite Verastem and Infinity Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem position performs unexpectedly, Infinity 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 Infinity Pharmaceuticals will offset losses from the drop in Infinity Pharmaceuticals' long position.The idea behind Verastem and Infinity Pharmaceuticals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Infinity Pharmaceuticals vs. NextCure | Infinity Pharmaceuticals vs. Chimerix | Infinity Pharmaceuticals vs. Eledon Pharmaceuticals | Infinity Pharmaceuticals vs. CytomX 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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