Correlation Between Cassava Sciences and Lantheus Holdings

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

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

Diversification Opportunities for Cassava Sciences and Lantheus Holdings

0.24

Correlation Coefficient

Cassava Sciences  Lantheus Holdings

Modest diversification

The 3 months correlation between Cassava and Lantheus is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Cassava Sciences and Lantheus Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lantheus Holdings and Cassava Sciences 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 Cassava Sciences are associated (or correlated) with Lantheus Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lantheus Holdings has no effect on the direction of Cassava Sciences i.e., Cassava Sciences and Lantheus Holdings go up and down completely randomly.

Pair Corralation between Cassava Sciences and Lantheus Holdings

Given the investment horizon of 90 days Cassava Sciences is expected to generate 1.94 times less return on investment than Lantheus Holdings. In addition to that, Cassava Sciences is 1.72 times more volatile than Lantheus Holdings. It trades about 0.05 of its total potential returns per unit of risk. Lantheus Holdings is currently generating about 0.17 per unit of volatility. If you would invest  6,259  in Lantheus Holdings on March 7, 2024 and sell it today you would earn a total of  1,893  from holding Lantheus Holdings or generate 30.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Cassava Sciences  vs.  Lantheus Holdings

Cassava Sciences

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cassava Sciences are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat abnormal basic indicators, Cassava Sciences sustained solid returns over the last few months and may actually be approaching a breakup point.

Lantheus Holdings

Risk-Adjusted Performance

13 of 100

Good

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

Pair Trading with Cassava Sciences and Lantheus Holdings

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

The idea behind Cassava Sciences and Lantheus Holdings 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.

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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 Transaction History module to view history of all your transactions and understand their impact on performance.