Correlation Between Equillium and VBI Vaccines

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

By analyzing existing cross correlation between Equillium and VBI Vaccines, you can compare the effects of market volatilities on Equillium and VBI Vaccines 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 VBI Vaccines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Equillium and VBI Vaccines.

Diversification Opportunities for Equillium and VBI Vaccines

-0.36

Correlation Coefficient

Equillium  VBI Vaccines

Very good diversification

The 3 months correlation between Equillium and VBI is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and VBI Vaccines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VBI Vaccines 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 VBI Vaccines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VBI Vaccines has no effect on the direction of Equillium i.e., Equillium and VBI Vaccines go up and down completely randomly.

Pair Corralation between Equillium and VBI Vaccines

Allowing for the 90-day total investment horizon Equillium is expected to generate 1.43 times more return on investment than VBI Vaccines. However, Equillium is 1.43 times more volatile than VBI Vaccines. It trades about 0.14 of its potential returns per unit of risk. VBI Vaccines is currently generating about 0.06 per unit of risk. If you would invest  58.00  in Equillium on January 19, 2024 and sell it today you would earn a total of  121.00  from holding Equillium or generate 208.62% return on investment over 90 days.

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

Equillium  vs.  VBI Vaccines

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.

VBI Vaccines

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VBI Vaccines are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting forward indicators, VBI Vaccines showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Equillium and VBI Vaccines

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

The idea behind Equillium and VBI Vaccines 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.