Correlation Between Exelixis and Evotec SE

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

By analyzing existing cross correlation between Exelixis and Evotec SE ADR, you can compare the effects of market volatilities on Exelixis and Evotec SE 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 Evotec SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exelixis and Evotec SE.

Diversification Opportunities for Exelixis and Evotec SE

0.85

Correlation Coefficient

Exelixis  Evotec SE

Very poor diversification

The 3 months correlation between Exelixis and Evotec is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Exelixis and Evotec SE ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evotec SE ADR 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 Evotec SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evotec SE ADR has no effect on the direction of Exelixis i.e., Exelixis and Evotec SE go up and down completely randomly.

Pair Corralation between Exelixis and Evotec SE

Given the investment horizon of 90 days Exelixis is expected to generate 0.44 times more return on investment than Evotec SE. However, Exelixis is 2.29 times less risky than Evotec SE. It trades about 0.08 of its potential returns per unit of risk. Evotec SE ADR is currently generating about -0.03 per unit of risk. If you would invest  2,150  in Exelixis on October 5, 2024 and sell it today you would earn a total of  1,247  from holding Exelixis or generate 58.0% return on investment over 90 days.

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

Exelixis  vs.  Evotec SE ADR

Exelixis

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Exelixis disclosed solid returns over the last few months and may actually be approaching a breakup point.

Evotec SE ADR

Risk-Adjusted Performance

8 of 100

OK

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

Pair Trading with Exelixis and Evotec SE

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

The idea behind Exelixis and Evotec SE ADR 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 Transaction History module to view history of all your transactions and understand their impact on performance.