Correlation Between Aileron Therapeutics and Fortress Biotech
Can any of the company-specific risk be diversified away by investing in both Aileron Therapeutics and Fortress Biotech 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 Aileron Therapeutics and Fortress Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aileron Therapeutics and Fortress Biotech, you can compare the effects of market volatilities on Aileron Therapeutics and Fortress Biotech 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 Aileron Therapeutics with a short position of Fortress Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aileron Therapeutics and Fortress Biotech.
Diversification Opportunities for Aileron Therapeutics and Fortress Biotech
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aileron and Fortress is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Aileron Therapeutics and Fortress Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech and Aileron Therapeutics 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 Aileron Therapeutics are associated (or correlated) with Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech has no effect on the direction of Aileron Therapeutics i.e., Aileron Therapeutics and Fortress Biotech go up and down completely randomly.
Pair Corralation between Aileron Therapeutics and Fortress Biotech
Given the investment horizon of 90 days Aileron Therapeutics is expected to under-perform the Fortress Biotech. But the stock apears to be less risky and, when comparing its historical volatility, Aileron Therapeutics is 1.26 times less risky than Fortress Biotech. The stock trades about -0.53 of its potential returns per unit of risk. The Fortress Biotech is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 170.00 in Fortress Biotech on September 13, 2024 and sell it today you would earn a total of 36.00 from holding Fortress Biotech or generate 21.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aileron Therapeutics vs. Fortress Biotech
Performance |
| Timeline |
| Aileron Therapeutics |
| Fortress Biotech |
Aileron Therapeutics and Fortress Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aileron Therapeutics and Fortress Biotech
The main advantage of trading using opposite Aileron Therapeutics and Fortress Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aileron Therapeutics position performs unexpectedly, Fortress Biotech 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 Fortress Biotech will offset losses from the drop in Fortress Biotech's long position.| Aileron Therapeutics vs. Bio Path Holdings | Aileron Therapeutics vs. Benitec Biopharma Ltd | Aileron Therapeutics vs. Artelo Biosciences | Aileron Therapeutics vs. Histogen |
| Fortress Biotech vs. Mustang Bio | Fortress Biotech vs. Achilles Therapeutics PLC | Fortress Biotech vs. Aptose Biosciences | Fortress Biotech vs. Fortress Biotech Pref |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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