Correlation Between Castle Biosciences and Charles River
Can any of the company-specific risk be diversified away by investing in both Castle Biosciences and Charles River 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 Castle Biosciences and Charles River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castle Biosciences and Charles River Laboratories, you can compare the effects of market volatilities on Castle Biosciences and Charles River 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 Castle Biosciences with a short position of Charles River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Biosciences and Charles River.
Diversification Opportunities for Castle Biosciences and Charles River
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Castle and Charles is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and Charles River Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charles River Labora and Castle Biosciences 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 Castle Biosciences are associated (or correlated) with Charles River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charles River Labora has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and Charles River go up and down completely randomly.
Pair Corralation between Castle Biosciences and Charles River
Given the investment horizon of 90 days Castle Biosciences is expected to under-perform the Charles River. But the stock apears to be less risky and, when comparing its historical volatility, Castle Biosciences is 1.09 times less risky than Charles River. The stock trades about -0.11 of its potential returns per unit of risk. The Charles River Laboratories is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 18,663 in Charles River Laboratories on August 24, 2024 and sell it today you would earn a total of 999.50 from holding Charles River Laboratories or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Castle Biosciences vs. Charles River Laboratories
Performance |
| Timeline |
| Castle Biosciences |
| Charles River Labora |
Castle Biosciences and Charles River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Castle Biosciences and Charles River
The main advantage of trading using opposite Castle Biosciences and Charles River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castle Biosciences position performs unexpectedly, Charles River 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 Charles River will offset losses from the drop in Charles River's long position.| Castle Biosciences vs. Caredx Inc | Castle Biosciences vs. Twist Bioscience Corp | Castle Biosciences vs. Biodesix | Castle Biosciences vs. Natera Inc |
| Charles River vs. ICON PLC | Charles River vs. Mettler Toledo International | Charles River vs. Laboratory of | Charles River vs. Waters |
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 Stocks Directory module to find actively traded stocks across global markets.
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