Correlation Between ImmunoGen and Denali Therapeutics

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Can any of the company-specific risk be diversified away by investing in both ImmunoGen and Denali Therapeutics 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 ImmunoGen and Denali Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ImmunoGen and Denali Therapeutics, you can compare the effects of market volatilities on ImmunoGen and Denali Therapeutics 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 ImmunoGen with a short position of Denali Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of ImmunoGen and Denali Therapeutics.

Diversification Opportunities for ImmunoGen and Denali Therapeutics

-0.28
  Correlation Coefficient

Very good diversification

The 3 months correlation between ImmunoGen and Denali is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding ImmunoGen and Denali Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denali Therapeutics and ImmunoGen 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 ImmunoGen are associated (or correlated) with Denali Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denali Therapeutics has no effect on the direction of ImmunoGen i.e., ImmunoGen and Denali Therapeutics go up and down completely randomly.

Pair Corralation between ImmunoGen and Denali Therapeutics

If you would invest  1,820  in ImmunoGen on September 10, 2024 and sell it today you would earn a total of  0.00  from holding ImmunoGen or generate 0.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy1.56%
ValuesDaily Returns

ImmunoGen  vs.  Denali Therapeutics

 Performance 
       Timeline  
ImmunoGen 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days ImmunoGen has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, ImmunoGen is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.
Denali Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Denali Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong essential indicators, Denali Therapeutics is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

ImmunoGen and Denali Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ImmunoGen and Denali Therapeutics

The main advantage of trading using opposite ImmunoGen and Denali Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ImmunoGen position performs unexpectedly, Denali Therapeutics 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 Denali Therapeutics will offset losses from the drop in Denali Therapeutics' long position.
The idea behind ImmunoGen and Denali Therapeutics 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.

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