Correlation Between Veracyte and Iovance Biotherapeutics

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

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

Diversification Opportunities for Veracyte and Iovance Biotherapeutics

-0.54

Correlation Coefficient

Veracyte  Iovance Biotherapeutics

Excellent diversification

The 3 months correlation between Veracyte and Iovance is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Veracyte and Iovance Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Iovance Biotherapeutics and Veracyte 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 Veracyte are associated (or correlated) with Iovance Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Iovance Biotherapeutics has no effect on the direction of Veracyte i.e., Veracyte and Iovance Biotherapeutics go up and down completely randomly.

Pair Corralation between Veracyte and Iovance Biotherapeutics

Given the investment horizon of 90 days Veracyte is expected to generate 0.71 times more return on investment than Iovance Biotherapeutics. However, Veracyte is 1.42 times less risky than Iovance Biotherapeutics. It trades about 0.28 of its potential returns per unit of risk. Iovance Biotherapeutics is currently generating about -0.09 per unit of risk. If you would invest  3,671  in Veracyte on September 18, 2024 and sell it today you would earn a total of  553.00  from holding Veracyte or generate 15.06% return on investment over 90 days.

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

Veracyte  vs.  Iovance Biotherapeutics

Veracyte

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Veracyte are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, Veracyte unveiled solid returns over the last few months and may actually be approaching a breakup point.

Iovance Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iovance Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Veracyte and Iovance Biotherapeutics

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

The idea behind Veracyte and Iovance Biotherapeutics 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.