Correlation Between Stagwell and Revolution Medicines
Can any of the company-specific risk be diversified away by investing in both Stagwell and Revolution Medicines 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 Stagwell and Revolution Medicines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stagwell and Revolution Medicines, you can compare the effects of market volatilities on Stagwell and Revolution Medicines 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 Stagwell with a short position of Revolution Medicines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stagwell and Revolution Medicines.
Diversification Opportunities for Stagwell and Revolution Medicines
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Stagwell and Revolution is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Stagwell and Revolution Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Medicines and Stagwell 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 Stagwell are associated (or correlated) with Revolution Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Medicines has no effect on the direction of Stagwell i.e., Stagwell and Revolution Medicines go up and down completely randomly.
Pair Corralation between Stagwell and Revolution Medicines
Given the investment horizon of 90 days Stagwell is expected to generate 4.55 times less return on investment than Revolution Medicines. But when comparing it to its historical volatility, Stagwell is 1.05 times less risky than Revolution Medicines. It trades about 0.04 of its potential returns per unit of risk. Revolution Medicines is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 3,842 in Revolution Medicines on July 20, 2025 and sell it today you would earn a total of 1,568 from holding Revolution Medicines or generate 40.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stagwell vs. Revolution Medicines
Performance |
| Timeline |
| Stagwell |
| Revolution Medicines |
Stagwell and Revolution Medicines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stagwell and Revolution Medicines
The main advantage of trading using opposite Stagwell and Revolution Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stagwell position performs unexpectedly, Revolution Medicines 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 Revolution Medicines will offset losses from the drop in Revolution Medicines' long position.The idea behind Stagwell and Revolution Medicines 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.| Revolution Medicines vs. Caris Life Sciences, | Revolution Medicines vs. Cytokinetics | Revolution Medicines vs. Jazz Pharmaceuticals PLC | Revolution Medicines vs. Madrigal Pharmaceuticals |
Check out your portfolio center.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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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