Correlation Between Day One and Bionomics
Can any of the company-specific risk be diversified away by investing in both Day One and Bionomics 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 Day One and Bionomics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Day One Biopharmaceuticals and Bionomics Ltd ADR, you can compare the effects of market volatilities on Day One and Bionomics 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 Day One with a short position of Bionomics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Day One and Bionomics.
Diversification Opportunities for Day One and Bionomics
Good diversification
The 3 months correlation between Day and Bionomics is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Day One Biopharmaceuticals and Bionomics Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bionomics ADR and Day One 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 Day One Biopharmaceuticals are associated (or correlated) with Bionomics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bionomics ADR has no effect on the direction of Day One i.e., Day One and Bionomics go up and down completely randomly.
Pair Corralation between Day One and Bionomics
Given the investment horizon of 90 days Day One Biopharmaceuticals is expected to under-perform the Bionomics. But the stock apears to be less risky and, when comparing its historical volatility, Day One Biopharmaceuticals is 1.81 times less risky than Bionomics. The stock trades about -0.29 of its potential returns per unit of risk. The Bionomics Ltd ADR is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 32.00 in Bionomics Ltd ADR on September 13, 2024 and sell it today you would lose (1.10) from holding Bionomics Ltd ADR or give up 3.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Day One Biopharmaceuticals vs. Bionomics Ltd ADR
Performance |
| Timeline |
| Day One Biopharmaceu |
| Bionomics ADR |
Day One and Bionomics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Day One and Bionomics
The main advantage of trading using opposite Day One and Bionomics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Day One position performs unexpectedly, Bionomics 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 Bionomics will offset losses from the drop in Bionomics' long position.| Day One vs. X4 Pharmaceuticals | Day One vs. Inozyme Pharma | Day One vs. Acumen Pharmaceuticals | Day One vs. Mereo BioPharma Group |
| Bionomics vs. Puma Biotechnology | Bionomics vs. Iovance Biotherapeutics | Bionomics vs. Sarepta Therapeutics | Bionomics vs. Day One Biopharmaceuticals |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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