Correlation Between Ultragenyx and Vaxcyte

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

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

Diversification Opportunities for Ultragenyx and Vaxcyte

0.58

Correlation Coefficient

Ultragenyx  Vaxcyte

Very weak diversification

The 3 months correlation between Ultragenyx and Vaxcyte is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Ultragenyx and Vaxcyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxcyte 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 Vaxcyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxcyte has no effect on the direction of Ultragenyx i.e., Ultragenyx and Vaxcyte go up and down completely randomly.

Pair Corralation between Ultragenyx and Vaxcyte

Given the investment horizon of 90 days Ultragenyx is expected to generate 0.75 times more return on investment than Vaxcyte. However, Ultragenyx is 1.33 times less risky than Vaxcyte. It trades about -0.06 of its potential returns per unit of risk. Vaxcyte is currently generating about -0.06 per unit of risk. If you would invest  4,387  in Ultragenyx on December 23, 2024 and sell it today you would lose (469.00) from holding Ultragenyx or give up 10.69% of portfolio value over 90 days.

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

Ultragenyx  vs.  Vaxcyte

Ultragenyx

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Vaxcyte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vaxcyte 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 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.

Pair Trading with Ultragenyx and Vaxcyte

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

The idea behind Ultragenyx and Vaxcyte 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.