Correlation Between Collegium Pharmaceutical and Dynavax Technologies

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

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

Diversification Opportunities for Collegium Pharmaceutical and Dynavax Technologies

-0.59

Correlation Coefficient

Collegium Pharmaceutical  Dynavax Technologies

Excellent diversification

The 3 months correlation between Collegium and Dynavax is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical and Dynavax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynavax Technologies and Collegium 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 Collegium Pharmaceutical are associated (or correlated) with Dynavax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynavax Technologies has no effect on the direction of Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Dynavax Technologies go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Dynavax Technologies

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 1.23 times less return on investment than Dynavax Technologies. In addition to that, Collegium Pharmaceutical is 1.76 times more volatile than Dynavax Technologies. It trades about 0.04 of its total potential returns per unit of risk. Dynavax Technologies is currently generating about 0.08 per unit of volatility. If you would invest  1,283  in Dynavax Technologies on December 30, 2024 and sell it today you would earn a total of  85.00  from holding Dynavax Technologies or generate 6.63% return on investment over 90 days.

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

Collegium Pharmaceutical  vs.  Dynavax Technologies

Collegium Pharmaceutical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Collegium Pharmaceutical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Collegium Pharmaceutical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Dynavax Technologies

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dynavax Technologies are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dynavax Technologies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Collegium Pharmaceutical and Dynavax Technologies

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

The idea behind Collegium Pharmaceutical and Dynavax Technologies 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.