Correlation Between TG Therapeutics and Exelixis

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

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

Diversification Opportunities for TG Therapeutics and Exelixis

0.87

Correlation Coefficient

TG Therapeutics  Exelixis

Very poor diversification

The 3 months correlation between TGTX and Exelixis is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding TG Therapeutics and Exelixis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelixis and TG 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 TG Therapeutics are associated (or correlated) with Exelixis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelixis has no effect on the direction of TG Therapeutics i.e., TG Therapeutics and Exelixis go up and down completely randomly.

Pair Corralation between TG Therapeutics and Exelixis

Given the investment horizon of 90 days TG Therapeutics is expected to generate 1.73 times more return on investment than Exelixis. However, TG Therapeutics is 1.73 times more volatile than Exelixis. It trades about 0.19 of its potential returns per unit of risk. Exelixis is currently generating about 0.23 per unit of risk. If you would invest  2,261  in TG Therapeutics on August 31, 2024 and sell it today you would earn a total of  1,239  from holding TG Therapeutics or generate 54.8% return on investment over 90 days.

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

TG Therapeutics  vs.  Exelixis

TG Therapeutics

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TG Therapeutics are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting basic indicators, TG Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Exelixis

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Exelixis disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TG Therapeutics and Exelixis

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

The idea behind TG Therapeutics and Exelixis 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.