Correlation Between Lantheus Holdings and Aquestive Therapeutics

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

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

Diversification Opportunities for Lantheus Holdings and Aquestive Therapeutics

0.22

Correlation Coefficient

Lantheus Holdings  Aquestive Therapeutics

Modest diversification

The 3 months correlation between Lantheus and Aquestive is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Lantheus Holdings and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Lantheus Holdings 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 Lantheus Holdings are associated (or correlated) with Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Lantheus Holdings i.e., Lantheus Holdings and Aquestive Therapeutics go up and down completely randomly.

Pair Corralation between Lantheus Holdings and Aquestive Therapeutics

Given the investment horizon of 90 days Lantheus Holdings is expected to under-perform the Aquestive Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Lantheus Holdings is 1.13 times less risky than Aquestive Therapeutics. The stock trades about -0.05 of its potential returns per unit of risk. The Aquestive Therapeutics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  419.00  in Aquestive Therapeutics on August 31, 2024 and sell it today you would earn a total of  97.00  from holding Aquestive Therapeutics or generate 23.15% return on investment over 90 days.

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

Lantheus Holdings  vs.  Aquestive Therapeutics

Lantheus Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lantheus Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Aquestive Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aquestive Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Aquestive Therapeutics unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Lantheus Holdings and Aquestive Therapeutics

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

The idea behind Lantheus Holdings and Aquestive 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 Commodity Directory module to find actively traded commodities issued by global exchanges.