Correlation Between Lexicon Pharmaceuticals and Intercept Pharmaceuticals

Can any of the company-specific risk be diversified away by investing in both Lexicon Pharmaceuticals and Intercept 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 Lexicon Pharmaceuticals and Intercept Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Lexicon Pharmaceuticals and Intercept Pharmaceuticals, you can compare the effects of market volatilities on Lexicon Pharmaceuticals and Intercept 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 Lexicon Pharmaceuticals with a short position of Intercept Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lexicon Pharmaceuticals and Intercept Pharmaceuticals.

Diversification Opportunities for Lexicon Pharmaceuticals and Intercept Pharmaceuticals

0.0

Correlation Coefficient

Lexicon Pharmaceuticals  Intercept Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Lexicon and Intercept is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Lexicon Pharmaceuticals and Intercept Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intercept Pharmaceuticals and Lexicon 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 Lexicon Pharmaceuticals are associated (or correlated) with Intercept Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intercept Pharmaceuticals has no effect on the direction of Lexicon Pharmaceuticals i.e., Lexicon Pharmaceuticals and Intercept Pharmaceuticals go up and down completely randomly.

Pair Corralation between Lexicon Pharmaceuticals and Intercept Pharmaceuticals

If you would invest  76.00  in Lexicon Pharmaceuticals on February 4, 2025 and sell it today you would lose (4.00) from holding Lexicon Pharmaceuticals or give up 5.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Lexicon Pharmaceuticals  vs.  Intercept Pharmaceuticals

Lexicon Pharmaceuticals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lexicon Pharmaceuticals are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Lexicon Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Intercept Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intercept Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Intercept Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Lexicon Pharmaceuticals and Intercept Pharmaceuticals

The main advantage of trading using opposite Lexicon Pharmaceuticals and Intercept Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lexicon Pharmaceuticals position performs unexpectedly, Intercept 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 Intercept Pharmaceuticals will offset losses from the drop in Intercept Pharmaceuticals' long position.

The idea behind Lexicon Pharmaceuticals and Intercept 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.