Correlation Between Biogen and ViroGates
Can any of the company-specific risk be diversified away by investing in both Biogen and ViroGates 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 Biogen and ViroGates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biogen Inc and ViroGates AS, you can compare the effects of market volatilities on Biogen and ViroGates 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 Biogen with a short position of ViroGates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biogen and ViroGates.
Diversification Opportunities for Biogen and ViroGates
Very weak diversification
The 3 months correlation between Biogen and ViroGates is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Biogen Inc and ViroGates AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ViroGates AS and Biogen 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 Biogen Inc are associated (or correlated) with ViroGates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ViroGates AS has no effect on the direction of Biogen i.e., Biogen and ViroGates go up and down completely randomly.
Pair Corralation between Biogen and ViroGates
Given the investment horizon of 90 days Biogen Inc is expected to generate 0.32 times more return on investment than ViroGates. However, Biogen Inc is 3.13 times less risky than ViroGates. It trades about -0.38 of its potential returns per unit of risk. ViroGates AS is currently generating about -0.27 per unit of risk. If you would invest 21,940 in Biogen Inc on January 17, 2024 and sell it today you would lose (2,260) from holding Biogen Inc or give up 10.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Biogen Inc vs. ViroGates AS
Performance |
| Timeline |
| Biogen Inc |
| ViroGates AS |
Biogen and ViroGates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Biogen and ViroGates
The main advantage of trading using opposite Biogen and ViroGates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biogen position performs unexpectedly, ViroGates 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 ViroGates will offset losses from the drop in ViroGates' long position.| Biogen vs. Bristol Myers Squibb | Biogen vs. AbbVie Inc | Biogen vs. Merck Company | Biogen vs. Gilead Sciences |
| ViroGates vs. Bavarian Nordic | ViroGates vs. Genmab AS | ViroGates vs. GN Store Nord | ViroGates vs. DSV Panalpina AS |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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