Correlation Between Black Diamond and Passage Bio
Can any of the company-specific risk be diversified away by investing in both Black Diamond and Passage 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 Black Diamond and Passage Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Diamond Therapeutics and Passage Bio, you can compare the effects of market volatilities on Black Diamond and Passage 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 Black Diamond with a short position of Passage Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Diamond and Passage Bio.
Diversification Opportunities for Black Diamond and Passage Bio
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Black and Passage is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Black Diamond Therapeutics and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage Bio and Black Diamond 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 Black Diamond Therapeutics are associated (or correlated) with Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of Black Diamond i.e., Black Diamond and Passage Bio go up and down completely randomly.
Pair Corralation between Black Diamond and Passage Bio
Given the investment horizon of 90 days Black Diamond Therapeutics is expected to generate 0.47 times more return on investment than Passage Bio. However, Black Diamond Therapeutics is 2.11 times less risky than Passage Bio. It trades about 0.03 of its potential returns per unit of risk. Passage Bio is currently generating about 0.01 per unit of risk. If you would invest 219.00 in Black Diamond Therapeutics on October 20, 2024 and sell it today you would earn a total of 1.00 from holding Black Diamond Therapeutics or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Diamond Therapeutics vs. Passage Bio
Performance |
| Timeline |
| Black Diamond Therap |
| Passage Bio |
Black Diamond and Passage Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Diamond and Passage Bio
The main advantage of trading using opposite Black Diamond and Passage Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Diamond position performs unexpectedly, Passage 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 Passage Bio will offset losses from the drop in Passage Bio's long position.| Black Diamond vs. Passage Bio | Black Diamond vs. Alector | Black Diamond vs. Revolution Medicines | Black Diamond vs. Stoke Therapeutics |
| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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