Correlation Between Evolus and Durect
Can any of the company-specific risk be diversified away by investing in both Evolus and Durect 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 Evolus and Durect into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Evolus Inc and Durect, you can compare the effects of market volatilities on Evolus and Durect 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 Evolus with a short position of Durect. Check out your portfolio center. Please also check ongoing floating volatility patterns of Evolus and Durect.
Diversification Opportunities for Evolus and Durect
Poor diversification
The 3 months correlation between Evolus and Durect is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Evolus Inc and Durect in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Durect and Evolus 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 Evolus Inc are associated (or correlated) with Durect. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Durect has no effect on the direction of Evolus i.e., Evolus and Durect go up and down completely randomly.
Pair Corralation between Evolus and Durect
Given the investment horizon of 90 days Evolus Inc is expected to generate 0.26 times more return on investment than Durect. However, Evolus Inc is 3.82 times less risky than Durect. It trades about -0.47 of its potential returns per unit of risk. Durect is currently generating about -0.29 per unit of risk. If you would invest 1,380 in Evolus Inc on January 25, 2024 and sell it today you would lose (210.00) from holding Evolus Inc or give up 15.22% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Evolus Inc vs. Durect
Performance |
Timeline |
Evolus Inc |
Durect |
Evolus and Durect Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Evolus and Durect
The main advantage of trading using opposite Evolus and Durect positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Evolus position performs unexpectedly, Durect 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 Durect will offset losses from the drop in Durect's long position.Evolus vs. Silver Spike Investment | Evolus vs. Alkermes Plc | Evolus vs. Eagle Pharmaceuticals | Evolus vs. Evotec SE ADR |
Durect vs. Silver Spike Investment | Durect vs. Alkermes Plc | Durect vs. Eagle Pharmaceuticals | Durect vs. Evotec SE ADR |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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