Correlation Between Exelixis and Agios Pharm

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

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

Diversification Opportunities for Exelixis and Agios Pharm

-0.34

Correlation Coefficient

Exelixis  Agios Pharm

Very good diversification

The 3 months correlation between Exelixis and Agios is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Exelixis and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Exelixis 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 Exelixis are associated (or correlated) with Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Exelixis i.e., Exelixis and Agios Pharm go up and down completely randomly.

Pair Corralation between Exelixis and Agios Pharm

Given the investment horizon of 90 days Exelixis is expected to generate 0.94 times more return on investment than Agios Pharm. However, Exelixis is 1.06 times less risky than Agios Pharm. It trades about 0.07 of its potential returns per unit of risk. Agios Pharm is currently generating about -0.03 per unit of risk. If you would invest  3,370  in Exelixis on December 29, 2024 and sell it today you would earn a total of  314.00  from holding Exelixis or generate 9.32% return on investment over 90 days.

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

Exelixis  vs.  Agios Pharm

Exelixis

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Exelixis may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Agios Pharm

Risk-Adjusted Performance

Very Weak

Over the last 90 days Agios Pharm has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Agios Pharm is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Exelixis and Agios Pharm

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

The idea behind Exelixis and Agios Pharm 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .