Correlation Between Monte Rosa and Lyell Immunopharma

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

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

Diversification Opportunities for Monte Rosa and Lyell Immunopharma

0.01

Correlation Coefficient

Monte Rosa  Lyell Immunopharma

Significant diversification

The 3 months correlation between Monte and Lyell is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Lyell Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyell Immunopharma and Monte Rosa 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 Monte Rosa Therapeutics 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 Monte Rosa i.e., Monte Rosa and Lyell Immunopharma go up and down completely randomly.

Pair Corralation between Monte Rosa and Lyell Immunopharma

Given the investment horizon of 90 days Monte Rosa Therapeutics is expected to under-perform the Lyell Immunopharma. But the stock apears to be less risky and, when comparing its historical volatility, Monte Rosa Therapeutics is 1.15 times less risky than Lyell Immunopharma. The stock trades about -0.08 of its potential returns per unit of risk. The Lyell Immunopharma is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  62.00  in Lyell Immunopharma on December 28, 2024 and sell it today you would lose (3.00) from holding Lyell Immunopharma or give up 4.84% of portfolio value over 90 days.

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

Monte Rosa Therapeutics  vs.  Lyell Immunopharma

Monte Rosa Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monte Rosa Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Lyell Immunopharma

Risk-Adjusted Performance

Very Weak

Over the last 90 days Lyell Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Lyell Immunopharma is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Monte Rosa and Lyell Immunopharma

The main advantage of trading using opposite Monte Rosa and Lyell Immunopharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monte Rosa 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 Monte Rosa Therapeutics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.