Correlation Between Pacira BioSciences, and Ironwood Pharmaceuticals

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

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

Diversification Opportunities for Pacira BioSciences, and Ironwood Pharmaceuticals

-0.33

Correlation Coefficient

Pacira BioSciences,  Ironwood Pharmaceuticals

Very good diversification

The 3 months correlation between Pacira and Ironwood is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Pacira BioSciences, and Ironwood Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ironwood Pharmaceuticals and Pacira BioSciences, 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 Pacira BioSciences, are associated (or correlated) with Ironwood Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ironwood Pharmaceuticals has no effect on the direction of Pacira BioSciences, i.e., Pacira BioSciences, and Ironwood Pharmaceuticals go up and down completely randomly.

Pair Corralation between Pacira BioSciences, and Ironwood Pharmaceuticals

Given the investment horizon of 90 days Pacira BioSciences, is expected to under-perform the Ironwood Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Pacira BioSciences, is 3.52 times less risky than Ironwood Pharmaceuticals. The stock trades about -0.06 of its potential returns per unit of risk. The Ironwood Pharmaceuticals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  79.00  in Ironwood Pharmaceuticals on May 7, 2025 and sell it today you would lose (4.00) from holding Ironwood Pharmaceuticals or give up 5.06% of portfolio value over 90 days.

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

Pacira BioSciences,  vs.  Ironwood Pharmaceuticals

Pacira BioSciences,

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacira BioSciences, has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent 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.

Ironwood Pharmaceuticals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ironwood Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Ironwood Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Pacira BioSciences, and Ironwood Pharmaceuticals

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

The idea behind Pacira BioSciences, and Ironwood 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.