Correlation Between Catalyst Pharmaceuticals and Ionis Pharmaceuticals

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

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

Diversification Opportunities for Catalyst Pharmaceuticals and Ionis Pharmaceuticals

-0.6

Correlation Coefficient

Catalyst Pharmaceuticals  Ionis Pharmaceuticals

Excellent diversification

The 3 months correlation between Catalyst and Ionis is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Catalyst Pharmaceuticals and Ionis Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ionis Pharmaceuticals and Catalyst Pharmaceuticals 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 Catalyst Pharmaceuticals are associated (or correlated) with Ionis Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ionis Pharmaceuticals has no effect on the direction of Catalyst Pharmaceuticals i.e., Catalyst Pharmaceuticals and Ionis Pharmaceuticals go up and down completely randomly.

Pair Corralation between Catalyst Pharmaceuticals and Ionis Pharmaceuticals

Given the investment horizon of 90 days Catalyst Pharmaceuticals is expected to under-perform the Ionis Pharmaceuticals. In addition to that, Catalyst Pharmaceuticals is 1.59 times more volatile than Ionis Pharmaceuticals. It trades about -0.11 of its total potential returns per unit of risk. Ionis Pharmaceuticals is currently generating about -0.15 per unit of volatility. If you would invest  4,394  in Ionis Pharmaceuticals on January 31, 2024 and sell it today you would lose (195.00) from holding Ionis Pharmaceuticals or give up 4.44% of portfolio value over 90 days.

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

Catalyst Pharmaceuticals  vs.  Ionis Pharmaceuticals

Catalyst Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Catalyst Pharmaceuticals is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Ionis Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ionis Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Catalyst Pharmaceuticals and Ionis Pharmaceuticals

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

The idea behind Catalyst Pharmaceuticals and Ionis Pharmaceuticals 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.