Correlation Between EFFECTOR Therapeutics and NewAmsterdam Pharma
Can any of the company-specific risk be diversified away by investing in both EFFECTOR Therapeutics and NewAmsterdam Pharma 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 EFFECTOR Therapeutics and NewAmsterdam Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EFFECTOR Therapeutics and NewAmsterdam Pharma, you can compare the effects of market volatilities on EFFECTOR Therapeutics and NewAmsterdam Pharma 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 EFFECTOR Therapeutics with a short position of NewAmsterdam Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of EFFECTOR Therapeutics and NewAmsterdam Pharma.
Diversification Opportunities for EFFECTOR Therapeutics and NewAmsterdam Pharma
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EFFECTOR and NewAmsterdam is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding EFFECTOR Therapeutics and NewAmsterdam Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewAmsterdam Pharma and EFFECTOR 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 EFFECTOR Therapeutics are associated (or correlated) with NewAmsterdam Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewAmsterdam Pharma has no effect on the direction of EFFECTOR Therapeutics i.e., EFFECTOR Therapeutics and NewAmsterdam Pharma go up and down completely randomly.
Pair Corralation between EFFECTOR Therapeutics and NewAmsterdam Pharma
If you would invest 890.00 in NewAmsterdam Pharma on August 28, 2024 and sell it today you would earn a total of 125.00 from holding NewAmsterdam Pharma or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
EFFECTOR Therapeutics vs. NewAmsterdam Pharma
Performance |
| Timeline |
| EFFECTOR Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NewAmsterdam Pharma |
EFFECTOR Therapeutics and NewAmsterdam Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EFFECTOR Therapeutics and NewAmsterdam Pharma
The main advantage of trading using opposite EFFECTOR Therapeutics and NewAmsterdam Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EFFECTOR Therapeutics position performs unexpectedly, NewAmsterdam Pharma 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 NewAmsterdam Pharma will offset losses from the drop in NewAmsterdam Pharma's long position.| EFFECTOR Therapeutics vs. Celularity | EFFECTOR Therapeutics vs. Humacyte | EFFECTOR Therapeutics vs. NRx Pharmaceuticals | EFFECTOR Therapeutics vs. Reviva Pharmaceuticals Holdings |
| NewAmsterdam Pharma vs. NewAmsterdam Pharma | NewAmsterdam Pharma vs. Scilex Holding | NewAmsterdam Pharma vs. OmniAb Inc |
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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