Correlation Between Vaxcyte and Amylyx Pharmaceuticals

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

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

Diversification Opportunities for Vaxcyte and Amylyx Pharmaceuticals

-0.24

Correlation Coefficient

Vaxcyte  Amylyx Pharmaceuticals

Very good diversification

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

Pair Corralation between Vaxcyte and Amylyx Pharmaceuticals

Given the investment horizon of 90 days Vaxcyte is expected to under-perform the Amylyx Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Vaxcyte is 2.25 times less risky than Amylyx Pharmaceuticals. The stock trades about -0.2 of its potential returns per unit of risk. The Amylyx Pharmaceuticals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  527.00  in Amylyx Pharmaceuticals on August 31, 2024 and sell it today you would earn a total of  47.00  from holding Amylyx Pharmaceuticals or generate 8.92% return on investment over 90 days.

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

Vaxcyte  vs.  Amylyx Pharmaceuticals

Vaxcyte

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Vaxcyte 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 fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Amylyx Pharmaceuticals

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amylyx Pharmaceuticals are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Amylyx Pharmaceuticals showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vaxcyte and Amylyx Pharmaceuticals

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

The idea behind Vaxcyte and Amylyx Pharmaceuticals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.