Correlation Between Ironwood Pharmaceuticals and Agile Thrpe

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

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

Diversification Opportunities for Ironwood Pharmaceuticals and Agile Thrpe

0.45

Correlation Coefficient

Ironwood Pharmaceuticals  Agile Thrpe

Very weak diversification

The 3 months correlation between Ironwood and Agile is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Ironwood Pharmaceuticals and Agile Thrpe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agile Thrpe and Ironwood Pharmaceuticals 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 Ironwood Pharmaceuticals are associated (or correlated) with Agile Thrpe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agile Thrpe has no effect on the direction of Ironwood Pharmaceuticals i.e., Ironwood Pharmaceuticals and Agile Thrpe go up and down completely randomly.

Pair Corralation between Ironwood Pharmaceuticals and Agile Thrpe

If you would invest  294.00  in Agile Thrpe on September 4, 2024 and sell it today you would earn a total of  0.00  from holding Agile Thrpe or generate 0.0% return on investment over 90 days.

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

Ironwood Pharmaceuticals  vs.  Agile Thrpe

Ironwood Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ironwood Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Agile Thrpe

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ironwood Pharmaceuticals and Agile Thrpe

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

The idea behind Ironwood Pharmaceuticals and Agile Thrpe 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.