Correlation Between Bluebird Bio and Sangamo Therapeutics
Can any of the company-specific risk be diversified away by investing in both Bluebird Bio and Sangamo Therapeutics 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 Bluebird Bio and Sangamo Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bluebird bio and Sangamo Therapeutics, you can compare the effects of market volatilities on Bluebird Bio and Sangamo Therapeutics 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 Bluebird Bio with a short position of Sangamo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bluebird Bio and Sangamo Therapeutics.
Diversification Opportunities for Bluebird Bio and Sangamo Therapeutics
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Bluebird and Sangamo is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Bluebird bio and Sangamo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangamo Therapeutics and Bluebird Bio 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 Bluebird bio are associated (or correlated) with Sangamo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangamo Therapeutics has no effect on the direction of Bluebird Bio i.e., Bluebird Bio and Sangamo Therapeutics go up and down completely randomly.
Pair Corralation between Bluebird Bio and Sangamo Therapeutics
Given the investment horizon of 90 days Bluebird bio is expected to under-perform the Sangamo Therapeutics. In addition to that, Bluebird Bio is 1.22 times more volatile than Sangamo Therapeutics. It trades about -0.12 of its total potential returns per unit of risk. Sangamo Therapeutics is currently generating about 0.11 per unit of volatility. If you would invest 109.00 in Sangamo Therapeutics on November 18, 2024 and sell it today you would earn a total of 8.00 from holding Sangamo Therapeutics or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bluebird bio vs. Sangamo Therapeutics
Performance |
| Timeline |
| Bluebird bio |
| Sangamo Therapeutics |
Bluebird Bio and Sangamo Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bluebird Bio and Sangamo Therapeutics
The main advantage of trading using opposite Bluebird Bio and Sangamo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bluebird Bio position performs unexpectedly, Sangamo Therapeutics 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 Sangamo Therapeutics will offset losses from the drop in Sangamo Therapeutics' long position.| Bluebird Bio vs. Mersana Therapeutics | Bluebird Bio vs. Zentalis Pharmaceuticals Llc | Bluebird Bio vs. Y mAbs Therapeutics | Bluebird Bio vs. Travere Therapeutics |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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