Correlation Between Cerevel Therapeutics and Lyell Immunopharma

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

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

Diversification Opportunities for Cerevel Therapeutics and Lyell Immunopharma

0.33

Correlation Coefficient

Cerevel Therapeutics  Lyell Immunopharma

Weak diversification

The 3 months correlation between Cerevel and Lyell is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cerevel Therapeutics Holdings and Lyell Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyell Immunopharma and Cerevel Therapeutics 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 Cerevel Therapeutics Holdings are associated (or correlated) with Lyell Immunopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyell Immunopharma has no effect on the direction of Cerevel Therapeutics i.e., Cerevel Therapeutics and Lyell Immunopharma go up and down completely randomly.

Pair Corralation between Cerevel Therapeutics and Lyell Immunopharma

If you would invest (100.00) in Cerevel Therapeutics Holdings on September 17, 2024 and sell it today you would earn a total of  100.00  from holding Cerevel Therapeutics Holdings or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Cerevel Therapeutics Holdings  vs.  Lyell Immunopharma

Cerevel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Lyell Immunopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyell Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Cerevel Therapeutics and Lyell Immunopharma

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

The idea behind Cerevel Therapeutics Holdings and Lyell Immunopharma 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.