Correlation Between Biomarin Pharmaceutical and Immunovant

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

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

Diversification Opportunities for Biomarin Pharmaceutical and Immunovant

0.36

Correlation Coefficient

Biomarin Pharmaceutical  Immunovant

Weak diversification

The 3 months correlation between Biomarin and Immunovant is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Biomarin Pharmaceutical and Immunovant in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunovant and Biomarin Pharmaceutical 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 Biomarin Pharmaceutical are associated (or correlated) with Immunovant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunovant has no effect on the direction of Biomarin Pharmaceutical i.e., Biomarin Pharmaceutical and Immunovant go up and down completely randomly.

Pair Corralation between Biomarin Pharmaceutical and Immunovant

Given the investment horizon of 90 days Biomarin Pharmaceutical is expected to under-perform the Immunovant. In addition to that, Biomarin Pharmaceutical is 1.02 times more volatile than Immunovant. It trades about -0.09 of its total potential returns per unit of risk. Immunovant is currently generating about 0.04 per unit of volatility. If you would invest  2,799  in Immunovant on July 23, 2024 and sell it today you would earn a total of  148.00  from holding Immunovant or generate 5.29% return on investment over 90 days.

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

Biomarin Pharmaceutical  vs.  Immunovant

Biomarin Pharmaceutical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biomarin Pharmaceutical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in November 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Immunovant

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Immunovant are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Immunovant may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Biomarin Pharmaceutical and Immunovant

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

The idea behind Biomarin Pharmaceutical and Immunovant 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.