Correlation Between Ultragenyx and Agios Pharm

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

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

Diversification Opportunities for Ultragenyx and Agios Pharm

-0.72

Correlation Coefficient

Ultragenyx  Agios Pharm

Pay attention - limited upside

The 3 months correlation between Ultragenyx and Agios is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ultragenyx and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Ultragenyx 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 Ultragenyx are associated (or correlated) with Agios Pharm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agios Pharm has no effect on the direction of Ultragenyx i.e., Ultragenyx and Agios Pharm go up and down completely randomly.

Pair Corralation between Ultragenyx and Agios Pharm

Given the investment horizon of 90 days Ultragenyx is expected to under-perform the Agios Pharm. But the stock apears to be less risky and, when comparing its historical volatility, Ultragenyx is 1.52 times less risky than Agios Pharm. The stock trades about -0.12 of its potential returns per unit of risk. The Agios Pharm is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  4,473  in Agios Pharm on September 2, 2024 and sell it today you would earn a total of  1,466  from holding Agios Pharm or generate 32.77% return on investment over 90 days.

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

Ultragenyx  vs.  Agios Pharm

Ultragenyx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ultragenyx 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 basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Agios Pharm

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Agios Pharm are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Agios Pharm displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ultragenyx and Agios Pharm

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

The idea behind Ultragenyx and Agios Pharm 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.