Correlation Between Iovance Biotherapeutics and Sarepta Therapeutics

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

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

Diversification Opportunities for Iovance Biotherapeutics and Sarepta Therapeutics

0.86

Correlation Coefficient

Iovance Biotherapeutics  Sarepta Therapeutics

Very poor diversification

The 3 months correlation between Iovance and Sarepta is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Iovance Biotherapeutics and Sarepta Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sarepta Therapeutics and Iovance Biotherapeutics 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 Iovance Biotherapeutics are associated (or correlated) with Sarepta Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sarepta Therapeutics has no effect on the direction of Iovance Biotherapeutics i.e., Iovance Biotherapeutics and Sarepta Therapeutics go up and down completely randomly.

Pair Corralation between Iovance Biotherapeutics and Sarepta Therapeutics

Given the investment horizon of 90 days Iovance Biotherapeutics is expected to under-perform the Sarepta Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Iovance Biotherapeutics is 1.02 times less risky than Sarepta Therapeutics. The stock trades about -0.23 of its potential returns per unit of risk. The Sarepta Therapeutics is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  12,119  in Sarepta Therapeutics on December 29, 2024 and sell it today you would lose (5,078) from holding Sarepta Therapeutics or give up 41.9% of portfolio value over 90 days.

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

Iovance Biotherapeutics  vs.  Sarepta Therapeutics

Iovance Biotherapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Iovance Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Sarepta Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sarepta 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Iovance Biotherapeutics and Sarepta Therapeutics

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

The idea behind Iovance Biotherapeutics and Sarepta 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.