Correlation Between Vera Therapeutics and Altimmune

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

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

Diversification Opportunities for Vera Therapeutics and Altimmune

0.71

Correlation Coefficient

Vera Therapeutics  Altimmune

Poor diversification

The 3 months correlation between Vera and Altimmune is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vera Therapeutics and Altimmune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altimmune and Vera 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 Vera Therapeutics are associated (or correlated) with Altimmune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altimmune has no effect on the direction of Vera Therapeutics i.e., Vera Therapeutics and Altimmune go up and down completely randomly.

Pair Corralation between Vera Therapeutics and Altimmune

Given the investment horizon of 90 days Vera Therapeutics is expected to under-perform the Altimmune. But the stock apears to be less risky and, when comparing its historical volatility, Vera Therapeutics is 2.39 times less risky than Altimmune. The stock trades about -0.3 of its potential returns per unit of risk. The Altimmune is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  868.00  in Altimmune on September 23, 2024 and sell it today you would lose (43.00) from holding Altimmune or give up 4.95% of portfolio value over 90 days.

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

Vera Therapeutics  vs.  Altimmune

Vera Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Altimmune

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Altimmune are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent essential indicators, Altimmune unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vera Therapeutics and Altimmune

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

The idea behind Vera Therapeutics and Altimmune 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.