Correlation Between Dynavax Technologies and Alkermes Plc

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

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

Diversification Opportunities for Dynavax Technologies and Alkermes Plc

0.87

Correlation Coefficient

Dynavax Technologies  Alkermes Plc

Very poor diversification

The 3 months correlation between Dynavax and Alkermes is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Dynavax Technologies and Alkermes Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkermes Plc and Dynavax Technologies 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 Dynavax Technologies 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 Dynavax Technologies i.e., Dynavax Technologies and Alkermes Plc go up and down completely randomly.

Pair Corralation between Dynavax Technologies and Alkermes Plc

Given the investment horizon of 90 days Dynavax Technologies is expected to under-perform the Alkermes Plc. But the stock apears to be less risky and, when comparing its historical volatility, Dynavax Technologies is 1.01 times less risky than Alkermes Plc. The stock trades about -0.07 of its potential returns per unit of risk. The Alkermes Plc is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  3,076  in Alkermes Plc on February 3, 2025 and sell it today you would earn a total of  102.00  from holding Alkermes Plc or generate 3.32% return on investment over 90 days.

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

Dynavax Technologies  vs.  Alkermes Plc

Dynavax Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dynavax Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Alkermes Plc

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alkermes Plc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable forward-looking signals, Alkermes Plc is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Dynavax Technologies and Alkermes Plc

The main advantage of trading using opposite Dynavax Technologies and Alkermes Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynavax Technologies 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 Dynavax Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.