Correlation Between Monte Rosa and Icosavax

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

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

Diversification Opportunities for Monte Rosa and Icosavax

0.24

Correlation Coefficient

Monte Rosa  Icosavax

Modest diversification

The 3 months correlation between Monte and Icosavax is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Icosavax in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Icosavax and Monte Rosa 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 Monte Rosa Therapeutics are associated (or correlated) with Icosavax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Icosavax has no effect on the direction of Monte Rosa i.e., Monte Rosa and Icosavax go up and down completely randomly.

Pair Corralation between Monte Rosa and Icosavax

If you would invest  582.00  in Monte Rosa Therapeutics on September 2, 2024 and sell it today you would earn a total of  454.00  from holding Monte Rosa Therapeutics or generate 78.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Monte Rosa Therapeutics  vs.  Icosavax

Monte Rosa Therapeutics

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monte Rosa Therapeutics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Monte Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.

Icosavax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Monte Rosa and Icosavax

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

The idea behind Monte Rosa Therapeutics and Icosavax 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.