Can any of the company-specific risk be diversified away by investing in both Vaxcyte and Oxford Biomedica 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 Oxford Biomedica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vaxcyte and Oxford Biomedica plc, you can compare the effects of market volatilities on Vaxcyte and Oxford Biomedica 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 Oxford Biomedica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vaxcyte and Oxford Biomedica.
Diversification Opportunities for Vaxcyte and Oxford Biomedica
The 3 months correlation between Vaxcyte and Oxford is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Vaxcyte and Oxford Biomedica plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oxford Biomedica plc 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 Oxford Biomedica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oxford Biomedica plc has no effect on the direction of Vaxcyte i.e., Vaxcyte and Oxford Biomedica go up and down completely randomly.
Pair Corralation between Vaxcyte and Oxford Biomedica
Given the investment horizon of 90 days Vaxcyte is expected to generate 1.74 times less return on investment than Oxford Biomedica. But when comparing it to its historical volatility, Vaxcyte is 1.19 times less risky than Oxford Biomedica. It trades about 0.17 of its potential returns per unit of risk. Oxford Biomedica plc is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 379.00 in Oxford Biomedica plc on March 6, 2024 and sell it today you would earn a total of 61.00 from holding Oxford Biomedica plc or generate 16.09% return on investment over 90 days.
Compared to the overall equity markets, risk-adjusted returns on investments in Vaxcyte are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Vaxcyte is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
Compared to the overall equity markets, risk-adjusted returns on investments in Oxford Biomedica plc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal fundamental indicators, Oxford Biomedica reported solid returns over the last few months and may actually be approaching a breakup point.