Correlation Between Lyell Immunopharma and Evogene

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

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

Diversification Opportunities for Lyell Immunopharma and Evogene

0.54

Correlation Coefficient

Lyell Immunopharma  Evogene

Very weak diversification

The 3 months correlation between Lyell and Evogene is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lyell Immunopharma and Evogene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evogene and Lyell Immunopharma 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 Lyell Immunopharma are associated (or correlated) with Evogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evogene has no effect on the direction of Lyell Immunopharma i.e., Lyell Immunopharma and Evogene go up and down completely randomly.

Pair Corralation between Lyell Immunopharma and Evogene

Given the investment horizon of 90 days Lyell Immunopharma is expected to generate 1.34 times more return on investment than Evogene. However, Lyell Immunopharma is 1.34 times more volatile than Evogene. It trades about -0.06 of its potential returns per unit of risk. Evogene is currently generating about -0.17 per unit of risk. If you would invest  140.00  in Lyell Immunopharma on August 31, 2024 and sell it today you would lose (48.00) from holding Lyell Immunopharma or give up 34.29% of portfolio value over 90 days.

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

Lyell Immunopharma  vs.  Evogene

Lyell Immunopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyell Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in December 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Evogene

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Evogene 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Lyell Immunopharma and Evogene

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

The idea behind Lyell Immunopharma and Evogene 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.