Correlation Between Equillium and Dynavax Technologies

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

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

Diversification Opportunities for Equillium and Dynavax Technologies

-0.62

Correlation Coefficient

Equillium  Dynavax Technologies

Excellent diversification

The 3 months correlation between Equillium and Dynavax is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Dynavax Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dynavax Technologies and Equillium 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 Equillium are associated (or correlated) with Dynavax Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dynavax Technologies has no effect on the direction of Equillium i.e., Equillium and Dynavax Technologies go up and down completely randomly.

Pair Corralation between Equillium and Dynavax Technologies

Allowing for the 90-day total investment horizon Equillium is expected to under-perform the Dynavax Technologies. In addition to that, Equillium is 4.71 times more volatile than Dynavax Technologies. It trades about -0.14 of its total potential returns per unit of risk. Dynavax Technologies is currently generating about -0.1 per unit of volatility. If you would invest  1,228  in Dynavax Technologies on January 19, 2024 and sell it today you would lose (85.00) from holding Dynavax Technologies or give up 6.92% of portfolio value over 90 days.

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

Equillium  vs.  Dynavax Technologies

Equillium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Dynavax Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynavax Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Equillium and Dynavax Technologies

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

The idea behind Equillium and Dynavax Technologies 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.