Correlation Between Silver Spike and Alkermes Plc

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Can any of the company-specific risk be diversified away by investing in both Silver Spike and Alkermes Plc 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 Silver Spike and Alkermes Plc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Silver Spike Investment and Alkermes Plc, you can compare the effects of market volatilities on Silver Spike and Alkermes Plc 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 Silver Spike with a short position of Alkermes Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Silver Spike and Alkermes Plc.

Diversification Opportunities for Silver Spike and Alkermes Plc

0.23
  Correlation Coefficient

Modest diversification

The 3 months correlation between Silver and Alkermes is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Silver Spike Investment and Alkermes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkermes Plc and Silver Spike 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 Silver Spike Investment are associated (or correlated) with Alkermes Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkermes Plc has no effect on the direction of Silver Spike i.e., Silver Spike and Alkermes Plc go up and down completely randomly.

Pair Corralation between Silver Spike and Alkermes Plc

Given the investment horizon of 90 days Silver Spike Investment is expected to generate 0.73 times more return on investment than Alkermes Plc. However, Silver Spike Investment is 1.37 times less risky than Alkermes Plc. It trades about 0.11 of its potential returns per unit of risk. Alkermes Plc is currently generating about 0.05 per unit of risk. If you would invest  826.00  in Silver Spike Investment on September 14, 2024 and sell it today you would earn a total of  454.00  from holding Silver Spike Investment or generate 54.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy96.65%
ValuesDaily Returns

Silver Spike Investment  vs.  Alkermes Plc

 Performance 
       Timeline  
Silver Spike Investment 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
OK
Over the last 90 days Silver Spike Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather fragile forward indicators, Silver Spike exhibited solid returns over the last few months and may actually be approaching a breakup point.
Alkermes Plc 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Alkermes Plc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Alkermes Plc may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Silver Spike and Alkermes Plc Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Silver Spike and Alkermes Plc

The main advantage of trading using opposite Silver Spike and Alkermes Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Silver Spike position performs unexpectedly, Alkermes Plc 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 Alkermes Plc will offset losses from the drop in Alkermes Plc's long position.
The idea behind Silver Spike Investment and Alkermes Plc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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