Correlation Between Editas Medicine and Sangamo Therapeutics
Can any of the company-specific risk be diversified away by investing in both Editas Medicine and Sangamo Therapeutics 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 Editas Medicine and Sangamo Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Editas Medicine and Sangamo Therapeutics, you can compare the effects of market volatilities on Editas Medicine and Sangamo Therapeutics 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 Editas Medicine with a short position of Sangamo Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Editas Medicine and Sangamo Therapeutics.
Diversification Opportunities for Editas Medicine and Sangamo Therapeutics
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Editas and Sangamo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Editas Medicine and Sangamo Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sangamo Therapeutics and Editas Medicine 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 Editas Medicine are associated (or correlated) with Sangamo Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sangamo Therapeutics has no effect on the direction of Editas Medicine i.e., Editas Medicine and Sangamo Therapeutics go up and down completely randomly.
Pair Corralation between Editas Medicine and Sangamo Therapeutics
Given the investment horizon of 90 days Editas Medicine is expected to under-perform the Sangamo Therapeutics. In addition to that, Editas Medicine is 1.12 times more volatile than Sangamo Therapeutics. It trades about -0.01 of its total potential returns per unit of risk. Sangamo Therapeutics is currently generating about 0.07 per unit of volatility. If you would invest 122.00 in Sangamo Therapeutics on November 9, 2024 and sell it today you would earn a total of 5.00 from holding Sangamo Therapeutics or generate 4.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Editas Medicine vs. Sangamo Therapeutics
Performance |
| Timeline |
| Editas Medicine |
| Sangamo Therapeutics |
Editas Medicine and Sangamo Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Editas Medicine and Sangamo Therapeutics
The main advantage of trading using opposite Editas Medicine and Sangamo Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Editas Medicine position performs unexpectedly, Sangamo Therapeutics 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 Sangamo Therapeutics will offset losses from the drop in Sangamo Therapeutics' long position.| Editas Medicine vs. Beam Therapeutics | Editas Medicine vs. Crispr Therapeutics AG | Editas Medicine vs. Caribou Biosciences | Editas Medicine vs. Verve Therapeutics |
| Sangamo Therapeutics vs. Editas Medicine | Sangamo Therapeutics vs. Intellia Therapeutics | Sangamo Therapeutics vs. Bluebird bio | Sangamo Therapeutics vs. Alnylam 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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