Correlation Between Lumos Pharma and Icosavax

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

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

Diversification Opportunities for Lumos Pharma and Icosavax

0.43

Correlation Coefficient

Lumos Pharma  Icosavax

Very weak diversification

The 3 months correlation between Lumos and Icosavax is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Lumos Pharma and Icosavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icosavax and Lumos Pharma 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 Lumos Pharma are associated (or correlated) with Icosavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icosavax has no effect on the direction of Lumos Pharma i.e., Lumos Pharma and Icosavax go up and down completely randomly.

Pair Corralation between Lumos Pharma and Icosavax

If you would invest  393.00  in Lumos Pharma on September 2, 2024 and sell it today you would earn a total of  37.00  from holding Lumos Pharma or generate 9.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Lumos Pharma  vs.  Icosavax

Lumos Pharma

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lumos Pharma are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Lumos Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Icosavax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Icosavax has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Icosavax is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Lumos Pharma and Icosavax

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

The idea behind Lumos Pharma and Icosavax 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.