Correlation Between MediciNova and Exelixis

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

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

Diversification Opportunities for MediciNova and Exelixis

0.38

Correlation Coefficient

MediciNova  Exelixis

Weak diversification

The 3 months correlation between MediciNova and Exelixis is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Exelixis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelixis and MediciNova 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 MediciNova are associated (or correlated) with Exelixis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelixis has no effect on the direction of MediciNova i.e., MediciNova and Exelixis go up and down completely randomly.

Pair Corralation between MediciNova and Exelixis

Given the investment horizon of 90 days MediciNova is expected to under-perform the Exelixis. In addition to that, MediciNova is 1.43 times more volatile than Exelixis. It trades about -0.27 of its total potential returns per unit of risk. Exelixis is currently generating about 0.23 per unit of volatility. If you would invest  3,348  in Exelixis on October 22, 2024 and sell it today you would earn a total of  272.00  from holding Exelixis or generate 8.12% return on investment over 90 days.

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

MediciNova  vs.  Exelixis

MediciNova

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MediciNova are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, MediciNova showed solid returns over the last few months and may actually be approaching a breakup point.

Exelixis

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Exelixis disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with MediciNova and Exelixis

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

The idea behind MediciNova and Exelixis 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.