Correlation Between Theravance Biopharma and Tango Therapeutics

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

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

Diversification Opportunities for Theravance Biopharma and Tango Therapeutics

0.85

Correlation Coefficient

Theravance Biopharma  Tango Therapeutics

Very poor diversification

The 3 months correlation between Theravance and Tango is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Theravance Biopharma and Tango Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tango Therapeutics and Theravance Biopharma 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 Theravance Biopharma are associated (or correlated) with Tango Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tango Therapeutics has no effect on the direction of Theravance Biopharma i.e., Theravance Biopharma and Tango Therapeutics go up and down completely randomly.

Pair Corralation between Theravance Biopharma and Tango Therapeutics

Given the investment horizon of 90 days Theravance Biopharma is expected to generate 19.0 times less return on investment than Tango Therapeutics. But when comparing it to its historical volatility, Theravance Biopharma is 2.75 times less risky than Tango Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Tango Therapeutics is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest  142.00  in Tango Therapeutics on May 5, 2025 and sell it today you would earn a total of  511.00  from holding Tango Therapeutics or generate 359.86% return on investment over 90 days.

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

Theravance Biopharma  vs.  Tango Therapeutics

Theravance Biopharma

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Theravance Biopharma are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Theravance Biopharma may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Tango Therapeutics

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tango Therapeutics are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Tango Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Theravance Biopharma and Tango Therapeutics

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

The idea behind Theravance Biopharma and Tango Therapeutics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.