Correlation Between Progyny and Legend Biotech

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

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

Diversification Opportunities for Progyny and Legend Biotech

0.75

Correlation Coefficient

Progyny  Legend Biotech

Poor diversification

The 3 months correlation between Progyny and Legend is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Progyny and Legend Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Biotech Corp and Progyny 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 Progyny are associated (or correlated) with Legend Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Biotech Corp has no effect on the direction of Progyny i.e., Progyny and Legend Biotech go up and down completely randomly.

Pair Corralation between Progyny and Legend Biotech

Given the investment horizon of 90 days Progyny is expected to under-perform the Legend Biotech. In addition to that, Progyny is 1.6 times more volatile than Legend Biotech Corp. It trades about -0.09 of its total potential returns per unit of risk. Legend Biotech Corp is currently generating about -0.13 per unit of volatility. If you would invest  5,733  in Legend Biotech Corp on September 2, 2024 and sell it today you would lose (1,526) from holding Legend Biotech Corp or give up 26.62% of portfolio value over 90 days.

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

Progyny  vs.  Legend Biotech Corp

Progyny

Risk-Adjusted Performance

0 of 100

Very Weak

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

Legend Biotech Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Legend Biotech Corp 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Progyny and Legend Biotech

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

The idea behind Progyny and Legend Biotech Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.