Correlation Between Cerevel Therapeutics and Erasca
Can any of the company-specific risk be diversified away by investing in both Cerevel Therapeutics and Erasca 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 Cerevel Therapeutics and Erasca into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cerevel Therapeutics Holdings and Erasca Inc, you can compare the effects of market volatilities on Cerevel Therapeutics and Erasca 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 Cerevel Therapeutics with a short position of Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cerevel Therapeutics and Erasca.
Diversification Opportunities for Cerevel Therapeutics and Erasca
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cerevel and Erasca is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cerevel Therapeutics Holdings and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc and Cerevel 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 Cerevel Therapeutics Holdings are associated (or correlated) with Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Cerevel Therapeutics i.e., Cerevel Therapeutics and Erasca go up and down completely randomly.
Pair Corralation between Cerevel Therapeutics and Erasca
Given the investment horizon of 90 days Cerevel Therapeutics Holdings is expected to generate 1.28 times more return on investment than Erasca. However, Cerevel Therapeutics is 1.28 times more volatile than Erasca Inc. It trades about -0.02 of its potential returns per unit of risk. Erasca Inc is currently generating about -0.02 per unit of risk. If you would invest 2,831 in Cerevel Therapeutics Holdings on August 25, 2024 and sell it today you would lose (2,831) from holding Cerevel Therapeutics Holdings or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 83.9% |
| Values | Daily Returns |
Cerevel Therapeutics Holdings vs. Erasca Inc
Performance |
| Timeline |
| Cerevel Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Erasca Inc |
Cerevel Therapeutics and Erasca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cerevel Therapeutics and Erasca
The main advantage of trading using opposite Cerevel Therapeutics and Erasca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cerevel Therapeutics position performs unexpectedly, Erasca 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 Erasca will offset losses from the drop in Erasca's long position.| Cerevel Therapeutics vs. Avidity Biosciences | Cerevel Therapeutics vs. Revolution Medicines | Cerevel Therapeutics vs. Day One Biopharmaceuticals | Cerevel Therapeutics vs. SpringWorks Therapeutics |
| Erasca vs. Eliem Therapeutics | Erasca vs. HCW Biologics | Erasca vs. RenovoRx | Erasca vs. Tempest 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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