Correlation Between Biomarin Pharmaceutical and Ultragenyx

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

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

Diversification Opportunities for Biomarin Pharmaceutical and Ultragenyx

-0.65

Correlation Coefficient

Biomarin Pharmaceutical  Ultragenyx

Excellent diversification

The 3 months correlation between Biomarin and Ultragenyx is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Biomarin Pharmaceutical and Ultragenyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultragenyx and Biomarin Pharmaceutical 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 Biomarin Pharmaceutical are associated (or correlated) with Ultragenyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultragenyx has no effect on the direction of Biomarin Pharmaceutical i.e., Biomarin Pharmaceutical and Ultragenyx go up and down completely randomly.

Pair Corralation between Biomarin Pharmaceutical and Ultragenyx

Given the investment horizon of 90 days Biomarin Pharmaceutical is expected to generate 0.67 times more return on investment than Ultragenyx. However, Biomarin Pharmaceutical is 1.5 times less risky than Ultragenyx. It trades about 0.09 of its potential returns per unit of risk. Ultragenyx is currently generating about -0.06 per unit of risk. If you would invest  6,573  in Biomarin Pharmaceutical on December 31, 2024 and sell it today you would earn a total of  571.00  from holding Biomarin Pharmaceutical or generate 8.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Biomarin Pharmaceutical  vs.  Ultragenyx

Biomarin Pharmaceutical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Biomarin Pharmaceutical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Biomarin Pharmaceutical may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Ultragenyx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultragenyx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Biomarin Pharmaceutical and Ultragenyx

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

The idea behind Biomarin Pharmaceutical and Ultragenyx 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..