Correlation Between Vir Biotechnology and Legend Biotech
Can any of the company-specific risk be diversified away by investing in both Vir Biotechnology and Legend Biotech 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 Vir Biotechnology and Legend Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vir Biotechnology and Legend Biotech Corp, you can compare the effects of market volatilities on Vir Biotechnology and Legend Biotech 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 Vir Biotechnology with a short position of Legend Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vir Biotechnology and Legend Biotech.
Diversification Opportunities for Vir Biotechnology and Legend Biotech
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Vir and Legend is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Vir Biotechnology and Legend Biotech Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legend Biotech Corp and Vir Biotechnology 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 Vir Biotechnology are associated (or correlated) with Legend Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legend Biotech Corp has no effect on the direction of Vir Biotechnology i.e., Vir Biotechnology and Legend Biotech go up and down completely randomly.
Pair Corralation between Vir Biotechnology and Legend Biotech
Considering the 90-day investment horizon Vir Biotechnology is expected to under-perform the Legend Biotech. In addition to that, Vir Biotechnology is 1.39 times more volatile than Legend Biotech Corp. It trades about -0.04 of its total potential returns per unit of risk. Legend Biotech Corp is currently generating about -0.01 per unit of volatility. If you would invest 4,810 in Legend Biotech Corp on September 26, 2024 and sell it today you would lose (1,530) from holding Legend Biotech Corp or give up 31.81% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Vir Biotechnology vs. Legend Biotech Corp
Performance |
Timeline |
Vir Biotechnology |
Legend Biotech Corp |
Vir Biotechnology and Legend Biotech Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vir Biotechnology and Legend Biotech
The main advantage of trading using opposite Vir Biotechnology and Legend Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vir Biotechnology position performs unexpectedly, Legend Biotech 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 Legend Biotech will offset losses from the drop in Legend Biotech's long position.Vir Biotechnology vs. CureVac NV | Vir Biotechnology vs. Krystal Biotech | Vir Biotechnology vs. Propanc Biopharma | Vir Biotechnology vs. Blueprint Medicines Corp |
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Check out your portfolio center.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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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