Correlation Between LENSAR and Vaxcyte

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

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

Diversification Opportunities for LENSAR and Vaxcyte

-0.53

Correlation Coefficient

LENSAR  Vaxcyte

Excellent diversification

The 3 months correlation between LENSAR and Vaxcyte is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Vaxcyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vaxcyte and LENSAR 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 LENSAR Inc are associated (or correlated) with Vaxcyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vaxcyte has no effect on the direction of LENSAR i.e., LENSAR and Vaxcyte go up and down completely randomly.

Pair Corralation between LENSAR and Vaxcyte

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.34 times more return on investment than Vaxcyte. However, LENSAR is 1.34 times more volatile than Vaxcyte. It trades about 0.09 of its potential returns per unit of risk. Vaxcyte is currently generating about 0.0 per unit of risk. If you would invest  286.00  in LENSAR Inc on January 17, 2025 and sell it today you would earn a total of  1,092  from holding LENSAR Inc or generate 381.82% return on investment over 90 days.

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

LENSAR Inc  vs.  Vaxcyte

LENSAR Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Vaxcyte

Risk-Adjusted Performance

Very Weak

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 May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LENSAR and Vaxcyte

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

The idea behind LENSAR Inc and Vaxcyte 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.