Correlation Between Alkermes Plc and Dynavax Technologies

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

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

Diversification Opportunities for Alkermes Plc and Dynavax Technologies

0.47

Correlation Coefficient

Alkermes Plc  Dynavax Technologies

Very weak diversification

The 3 months correlation between Alkermes and Dynavax is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Alkermes Plc and Dynavax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynavax Technologies and Alkermes Plc 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 Alkermes Plc are associated (or correlated) with Dynavax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynavax Technologies has no effect on the direction of Alkermes Plc i.e., Alkermes Plc and Dynavax Technologies go up and down completely randomly.

Pair Corralation between Alkermes Plc and Dynavax Technologies

Given the investment horizon of 90 days Alkermes Plc is expected to generate 3.81 times less return on investment than Dynavax Technologies. But when comparing it to its historical volatility, Alkermes Plc is 1.03 times less risky than Dynavax Technologies. It trades about 0.03 of its potential returns per unit of risk. Dynavax Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,088  in Dynavax Technologies on September 3, 2024 and sell it today you would earn a total of  198.00  from holding Dynavax Technologies or generate 18.2% return on investment over 90 days.

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

Alkermes Plc  vs.  Dynavax Technologies

Alkermes Plc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alkermes Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Alkermes Plc is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Dynavax Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dynavax Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dynavax Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkermes Plc and Dynavax Technologies

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

The idea behind Alkermes Plc and Dynavax Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.