Correlation Between Seagen and Zoetis

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

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

Diversification Opportunities for Seagen and Zoetis

-0.35

Correlation Coefficient

Seagen  Zoetis

Very good diversification

The 3 months correlation between Seagen and Zoetis is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Seagen Inc and Zoetis Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zoetis Inc and Seagen 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 Seagen Inc are associated (or correlated) with Zoetis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zoetis Inc has no effect on the direction of Seagen i.e., Seagen and Zoetis go up and down completely randomly.

Pair Corralation between Seagen and Zoetis

If you would invest  16,539  in Zoetis Inc on February 5, 2024 and sell it today you would earn a total of  168.00  from holding Zoetis Inc or generate 1.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Seagen Inc  vs.  Zoetis Inc

Seagen Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seagen Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Seagen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Zoetis Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zoetis Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Seagen and Zoetis

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

The idea behind Seagen Inc and Zoetis Inc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.