Correlation Between Seagen and Agios Pharm

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

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

Diversification Opportunities for Seagen and Agios Pharm

-0.31

Correlation Coefficient

Seagen  Agios Pharm

Very good diversification

The 3 months correlation between Seagen and Agios is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Seagen Inc and Agios Pharm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agios Pharm and Seagen 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 Seagen Inc 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 Seagen i.e., Seagen and Agios Pharm go up and down completely randomly.

Pair Corralation between Seagen and Agios Pharm

If you would invest  4,473  in Agios Pharm on September 3, 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	Insignificant
Accuracy	1.56%
Values	Daily Returns

Seagen Inc  vs.  Agios Pharm

Seagen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Seagen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 Seagen and Agios Pharm

The main advantage of trading using opposite Seagen and Agios Pharm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seagen 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 Seagen Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .