Correlation Between Dynavax Technologies and Eagle Pharmaceuticals

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

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

Diversification Opportunities for Dynavax Technologies and Eagle Pharmaceuticals

0.74

Correlation Coefficient

Dynavax Technologies  Eagle Pharmaceuticals

Poor diversification

The 3 months correlation between Dynavax and Eagle is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dynavax Technologies and Eagle Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Pharmaceuticals and Dynavax Technologies 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 Dynavax Technologies are associated (or correlated) with Eagle Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Pharmaceuticals has no effect on the direction of Dynavax Technologies i.e., Dynavax Technologies and Eagle Pharmaceuticals go up and down completely randomly.

Pair Corralation between Dynavax Technologies and Eagle Pharmaceuticals

Given the investment horizon of 90 days Dynavax Technologies is expected to under-perform the Eagle Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Dynavax Technologies is 3.61 times less risky than Eagle Pharmaceuticals. The stock trades about -0.14 of its potential returns per unit of risk. The Eagle Pharmaceuticals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  450.00  in Eagle Pharmaceuticals on February 2, 2024 and sell it today you would lose (10.00) from holding Eagle Pharmaceuticals or give up 2.22% of portfolio value over 90 days.

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

Dynavax Technologies  vs.  Eagle Pharmaceuticals

Dynavax Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dynavax Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Eagle Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eagle Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Dynavax Technologies and Eagle Pharmaceuticals

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

The idea behind Dynavax Technologies and Eagle 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.