Correlation Between Design Therapeutics and NextCure
Can any of the company-specific risk be diversified away by investing in both Design Therapeutics and NextCure 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 Design Therapeutics and NextCure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Design Therapeutics and NextCure, you can compare the effects of market volatilities on Design Therapeutics and NextCure 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 Design Therapeutics with a short position of NextCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Design Therapeutics and NextCure.
Diversification Opportunities for Design Therapeutics and NextCure
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Design and NextCure is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Design Therapeutics and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Design 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 Design Therapeutics are associated (or correlated) with NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Design Therapeutics i.e., Design Therapeutics and NextCure go up and down completely randomly.
Pair Corralation between Design Therapeutics and NextCure
Given the investment horizon of 90 days Design Therapeutics is expected to generate 1.54 times more return on investment than NextCure. However, Design Therapeutics is 1.54 times more volatile than NextCure. It trades about 0.08 of its potential returns per unit of risk. NextCure is currently generating about -0.13 per unit of risk. If you would invest 557.00 in Design Therapeutics on August 31, 2024 and sell it today you would earn a total of 40.00 from holding Design Therapeutics or generate 7.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Design Therapeutics vs. NextCure
Performance |
| Timeline |
| Design Therapeutics |
| NextCure |
Design Therapeutics and NextCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Design Therapeutics and NextCure
The main advantage of trading using opposite Design Therapeutics and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Design Therapeutics position performs unexpectedly, NextCure 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 NextCure will offset losses from the drop in NextCure's long position.| Design Therapeutics vs. Cue Biopharma | Design Therapeutics vs. Eliem Therapeutics | Design Therapeutics vs. Inhibrx | Design Therapeutics vs. Molecular Partners AG |
| NextCure vs. CytomX Therapeutics | NextCure vs. Spero Therapeutics | NextCure vs. Instil Bio | NextCure vs. Assembly Biosciences |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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