Correlation Between Beam Therapeutics and Editas Medicine
Can any of the company-specific risk be diversified away by investing in both Beam Therapeutics and Editas Medicine 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 Beam Therapeutics and Editas Medicine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beam Therapeutics and Editas Medicine, you can compare the effects of market volatilities on Beam Therapeutics and Editas Medicine 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 Beam Therapeutics with a short position of Editas Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beam Therapeutics and Editas Medicine.
Diversification Opportunities for Beam Therapeutics and Editas Medicine
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Beam and Editas is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Beam Therapeutics and Editas Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Editas Medicine and Beam 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 Beam Therapeutics are associated (or correlated) with Editas Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Editas Medicine has no effect on the direction of Beam Therapeutics i.e., Beam Therapeutics and Editas Medicine go up and down completely randomly.
Pair Corralation between Beam Therapeutics and Editas Medicine
Given the investment horizon of 90 days Beam Therapeutics is expected to generate 0.94 times more return on investment than Editas Medicine. However, Beam Therapeutics is 1.06 times less risky than Editas Medicine. It trades about -0.01 of its potential returns per unit of risk. Editas Medicine is currently generating about -0.04 per unit of risk. If you would invest 4,318 in Beam Therapeutics on August 27, 2024 and sell it today you would lose (1,813) from holding Beam Therapeutics or give up 41.99% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beam Therapeutics vs. Editas Medicine
Performance |
| Timeline |
| Beam Therapeutics |
| Editas Medicine |
Beam Therapeutics and Editas Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beam Therapeutics and Editas Medicine
The main advantage of trading using opposite Beam Therapeutics and Editas Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beam Therapeutics position performs unexpectedly, Editas Medicine 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 Editas Medicine will offset losses from the drop in Editas Medicine's long position.| Beam Therapeutics vs. Editas Medicine | Beam Therapeutics vs. Crispr Therapeutics AG | Beam Therapeutics vs. Caribou Biosciences | Beam Therapeutics vs. Verve Therapeutics |
| Editas Medicine vs. Beam Therapeutics | Editas Medicine vs. Crispr Therapeutics AG | Editas Medicine vs. Caribou Biosciences | Editas Medicine vs. Verve Therapeutics |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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