Correlation Between United Therapeutics and Exelixis

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

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

Diversification Opportunities for United Therapeutics and Exelixis

0.11

Correlation Coefficient

United Therapeutics  Exelixis

Average diversification

The 3 months correlation between United and Exelixis is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding United Therapeutics and Exelixis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelixis and United 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 United 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 United Therapeutics i.e., United Therapeutics and Exelixis go up and down completely randomly.

Pair Corralation between United Therapeutics and Exelixis

Given the investment horizon of 90 days United Therapeutics is expected to under-perform the Exelixis. But the stock apears to be less risky and, when comparing its historical volatility, United Therapeutics is 1.09 times less risky than Exelixis. The stock trades about -0.1 of its potential returns per unit of risk. The Exelixis is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,646  in Exelixis on November 29, 2024 and sell it today you would earn a total of  107.00  from holding Exelixis or generate 2.93% return on investment over 90 days.

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

United Therapeutics  vs.  Exelixis

United Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days United Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical indicators remain relatively invariable which may send shares a bit higher in March 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Exelixis

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent technical and fundamental indicators, Exelixis is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with United Therapeutics and Exelixis

The main advantage of trading using opposite United Therapeutics and Exelixis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United 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 United 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.