Correlation Between BioCardia and Entera Bio
Can any of the company-specific risk be diversified away by investing in both BioCardia and Entera Bio 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 BioCardia and Entera Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioCardia and Entera Bio, you can compare the effects of market volatilities on BioCardia and Entera Bio 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 BioCardia with a short position of Entera Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioCardia and Entera Bio.
Diversification Opportunities for BioCardia and Entera Bio
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between BioCardia and Entera is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding BioCardia and Entera Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entera Bio and BioCardia 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 BioCardia are associated (or correlated) with Entera Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entera Bio has no effect on the direction of BioCardia i.e., BioCardia and Entera Bio go up and down completely randomly.
Pair Corralation between BioCardia and Entera Bio
Assuming the 90 days horizon BioCardia is expected to generate 1.62 times more return on investment than Entera Bio. However, BioCardia is 1.62 times more volatile than Entera Bio. It trades about 0.08 of its potential returns per unit of risk. Entera Bio is currently generating about 0.04 per unit of risk. If you would invest 75.00 in BioCardia on August 25, 2024 and sell it today you would lose (75.00) from holding BioCardia or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 20.21% |
| Values | Daily Returns |
BioCardia vs. Entera Bio
Performance |
| Timeline |
| BioCardia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Entera Bio |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
BioCardia and Entera Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioCardia and Entera Bio
The main advantage of trading using opposite BioCardia and Entera Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioCardia position performs unexpectedly, Entera Bio 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 Entera Bio will offset losses from the drop in Entera Bio's long position.The idea behind BioCardia and Entera Bio 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.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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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