Correlation Between Vaxcyte and Illumina

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

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

Diversification Opportunities for Vaxcyte and Illumina

0.43

Correlation Coefficient

Vaxcyte  Illumina

Very weak diversification

The 3 months correlation between Vaxcyte and Illumina is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Vaxcyte and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina and Vaxcyte 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 Vaxcyte are associated (or correlated) with Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Vaxcyte i.e., Vaxcyte and Illumina go up and down completely randomly.

Pair Corralation between Vaxcyte and Illumina

Given the investment horizon of 90 days Vaxcyte is expected to generate 1.33 times more return on investment than Illumina. However, Vaxcyte is 1.33 times more volatile than Illumina. It trades about 0.14 of its potential returns per unit of risk. Illumina is currently generating about 0.07 per unit of risk. If you would invest  4,933  in Vaxcyte on June 20, 2024 and sell it today you would earn a total of  6,721  from holding Vaxcyte or generate 136.25% return on investment over 90 days.

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

Vaxcyte  vs.  Illumina

Vaxcyte

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vaxcyte are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Vaxcyte showed solid returns over the last few months and may actually be approaching a breakup point.

Illumina

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Illumina are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Illumina displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vaxcyte and Illumina

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

The idea behind Vaxcyte and Illumina 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.