Correlation Between Sarepta Therapeutics and Reata Pharmaceuticals

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

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

Diversification Opportunities for Sarepta Therapeutics and Reata Pharmaceuticals

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Correlation Coefficient

Sarepta Therapeutics  Reata Pharmaceuticals

Pay attention - limited upside

The 3 months correlation between Sarepta and Reata is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Sarepta Therapeutics and Reata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reata Pharmaceuticals and Sarepta Therapeutics 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 Sarepta Therapeutics are associated (or correlated) with Reata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reata Pharmaceuticals has no effect on the direction of Sarepta Therapeutics i.e., Sarepta Therapeutics and Reata Pharmaceuticals go up and down completely randomly.

Pair Corralation between Sarepta Therapeutics and Reata Pharmaceuticals

If you would invest (100.00) in Reata Pharmaceuticals on December 29, 2024 and sell it today you would earn a total of  100.00  from holding Reata Pharmaceuticals or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Sarepta Therapeutics  vs.  Reata Pharmaceuticals

Sarepta Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sarepta Therapeutics 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 comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Reata Pharmaceuticals

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Sarepta Therapeutics and Reata Pharmaceuticals

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

The idea behind Sarepta Therapeutics and Reata Pharmaceuticals 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.