Correlation Between BridgeBio Pharma and IVERIC Bio

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

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

Diversification Opportunities for BridgeBio Pharma and IVERIC Bio

0.0

Correlation Coefficient

BridgeBio Pharma  IVERIC Bio

Pay attention - limited upside

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

Pair Corralation between BridgeBio Pharma and IVERIC Bio

If you would invest  2,709  in BridgeBio Pharma on October 9, 2024 and sell it today you would earn a total of  117.00  from holding BridgeBio Pharma or generate 4.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	2.5%
Values	Daily Returns

BridgeBio Pharma  vs.  IVERIC Bio

BridgeBio Pharma

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BridgeBio Pharma are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, BridgeBio Pharma displayed solid returns over the last few months and may actually be approaching a breakup point.

IVERIC Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IVERIC Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, IVERIC Bio is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with BridgeBio Pharma and IVERIC Bio

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

The idea behind BridgeBio Pharma and IVERIC Bio 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.