Correlation Between Neurocrine Biosciences and SIGA Technologies

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

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

Diversification Opportunities for Neurocrine Biosciences and SIGA Technologies

0.62

Correlation Coefficient

Neurocrine Biosciences  SIGA Technologies

Poor diversification

The 3 months correlation between Neurocrine and SIGA is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Neurocrine Biosciences and SIGA Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SIGA Technologies and Neurocrine Biosciences 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 Neurocrine Biosciences are associated (or correlated) with SIGA Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SIGA Technologies has no effect on the direction of Neurocrine Biosciences i.e., Neurocrine Biosciences and SIGA Technologies go up and down completely randomly.

Pair Corralation between Neurocrine Biosciences and SIGA Technologies

Given the investment horizon of 90 days Neurocrine Biosciences is expected to under-perform the SIGA Technologies. In addition to that, Neurocrine Biosciences is 1.09 times more volatile than SIGA Technologies. It trades about -0.09 of its total potential returns per unit of risk. SIGA Technologies is currently generating about -0.03 per unit of volatility. If you would invest  592.00  in SIGA Technologies on December 29, 2024 and sell it today you would lose (37.00) from holding SIGA Technologies or give up 6.25% of portfolio value over 90 days.

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

Neurocrine Biosciences  vs.  SIGA Technologies

Neurocrine Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neurocrine Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's forward indicators remain fairly 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.

SIGA Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIGA Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, SIGA Technologies is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Neurocrine Biosciences and SIGA Technologies

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

The idea behind Neurocrine Biosciences and SIGA Technologies 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.