Correlation Between Ventyx Biosciences and Vaxcyte

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

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

Diversification Opportunities for Ventyx Biosciences and Vaxcyte

0.75

Correlation Coefficient

Ventyx Biosciences  Vaxcyte

Poor diversification

The 3 months correlation between Ventyx and Vaxcyte is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Ventyx Biosciences and Vaxcyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxcyte and Ventyx Biosciences 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 Ventyx Biosciences are associated (or correlated) with Vaxcyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxcyte has no effect on the direction of Ventyx Biosciences i.e., Ventyx Biosciences and Vaxcyte go up and down completely randomly.

Pair Corralation between Ventyx Biosciences and Vaxcyte

Given the investment horizon of 90 days Ventyx Biosciences is expected to under-perform the Vaxcyte. In addition to that, Ventyx Biosciences is 1.41 times more volatile than Vaxcyte. It trades about -0.19 of its total potential returns per unit of risk. Vaxcyte is currently generating about -0.06 per unit of volatility. If you would invest  8,199  in Vaxcyte on December 29, 2024 and sell it today you would lose (1,122) from holding Vaxcyte or give up 13.68% of portfolio value over 90 days.

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

Ventyx Biosciences  vs.  Vaxcyte

Ventyx Biosciences

Risk-Adjusted Performance

Very Weak

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

Vaxcyte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vaxcyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ventyx Biosciences and Vaxcyte

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

The idea behind Ventyx Biosciences and Vaxcyte 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.