Correlation Between Biogen and Aldeyra
Can any of the company-specific risk be diversified away by investing in both Biogen and Aldeyra 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 Biogen and Aldeyra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and Aldeyra, you can compare the effects of market volatilities on Biogen and Aldeyra 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 Biogen with a short position of Aldeyra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and Aldeyra.
Diversification Opportunities for Biogen and Aldeyra
Excellent diversification
The 3 months correlation between Biogen and Aldeyra is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and Aldeyra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aldeyra and Biogen 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 Biogen Inc are associated (or correlated) with Aldeyra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aldeyra has no effect on the direction of Biogen i.e., Biogen and Aldeyra go up and down completely randomly.
Pair Corralation between Biogen and Aldeyra
Given the investment horizon of 90 days Biogen is expected to generate 35.63 times less return on investment than Aldeyra. But when comparing it to its historical volatility, Biogen Inc is 2.95 times less risky than Aldeyra. It trades about 0.02 of its potential returns per unit of risk. Aldeyra is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 327.00 in Aldeyra on January 31, 2024 and sell it today you would earn a total of 78.00 from holding Aldeyra or generate 23.85% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Biogen Inc vs. Aldeyra
Performance |
Timeline |
Biogen Inc |
Aldeyra |
Biogen and Aldeyra Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Biogen and Aldeyra
The main advantage of trading using opposite Biogen and Aldeyra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen position performs unexpectedly, Aldeyra 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 Aldeyra will offset losses from the drop in Aldeyra's long position.Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen vs. Gilead Sciences |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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