Correlation Between Verastem and Exelixis

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

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

Diversification Opportunities for Verastem and Exelixis

-0.41

Correlation Coefficient

Verastem  Exelixis

Very good diversification

The 3 months correlation between Verastem and Exelixis is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and Exelixis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelixis and Verastem 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 Verastem are associated (or correlated) with Exelixis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelixis has no effect on the direction of Verastem i.e., Verastem and Exelixis go up and down completely randomly.

Pair Corralation between Verastem and Exelixis

Given the investment horizon of 90 days Verastem is expected to under-perform the Exelixis. In addition to that, Verastem is 1.34 times more volatile than Exelixis. It trades about -0.02 of its total potential returns per unit of risk. Exelixis is currently generating about 0.0 per unit of volatility. If you would invest  3,889  in Exelixis on May 1, 2025 and sell it today you would lose (195.00) from holding Exelixis or give up 5.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Verastem  vs.  Exelixis

Verastem

Risk-Adjusted Performance

Very Weak

Over the last 90 days Verastem has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Exelixis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exelixis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Exelixis is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Verastem and Exelixis

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

The idea behind Verastem and Exelixis 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.