Correlation Between Castle Biosciences and EXACT Sciences
Can any of the company-specific risk be diversified away by investing in both Castle Biosciences and EXACT Sciences 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 EXACT Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castle Biosciences and EXACT Sciences, you can compare the effects of market volatilities on Castle Biosciences and EXACT Sciences 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 EXACT Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castle Biosciences and EXACT Sciences.
Diversification Opportunities for Castle Biosciences and EXACT Sciences
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Castle and EXACT is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Castle Biosciences and EXACT Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXACT Sciences 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 EXACT Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXACT Sciences has no effect on the direction of Castle Biosciences i.e., Castle Biosciences and EXACT Sciences go up and down completely randomly.
Pair Corralation between Castle Biosciences and EXACT Sciences
Given the investment horizon of 90 days Castle Biosciences is expected to generate 0.62 times more return on investment than EXACT Sciences. However, Castle Biosciences is 1.62 times less risky than EXACT Sciences. It trades about -0.11 of its potential returns per unit of risk. EXACT Sciences is currently generating about -0.15 per unit of risk. If you would invest 3,240 in Castle Biosciences on August 28, 2024 and sell it today you would lose (289.00) from holding Castle Biosciences or give up 8.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Castle Biosciences vs. EXACT Sciences
Performance |
| Timeline |
| Castle Biosciences |
| EXACT Sciences |
Castle Biosciences and EXACT Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Castle Biosciences and EXACT Sciences
The main advantage of trading using opposite Castle Biosciences and EXACT Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castle Biosciences position performs unexpectedly, EXACT Sciences 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 EXACT Sciences will offset losses from the drop in EXACT Sciences' long position.| Castle Biosciences vs. Caredx Inc | Castle Biosciences vs. Twist Bioscience Corp | Castle Biosciences vs. Biodesix | Castle Biosciences vs. Natera Inc |
| EXACT Sciences vs. Eliem Therapeutics | EXACT Sciences vs. HCW Biologics | EXACT Sciences vs. Scpharmaceuticals | EXACT Sciences vs. Milestone Pharmaceuticals |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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