Correlation Between Erasca and Aerovate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Erasca and Aerovate 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 Erasca and Aerovate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erasca Inc and Aerovate Therapeutics, you can compare the effects of market volatilities on Erasca and Aerovate 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 Erasca with a short position of Aerovate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erasca and Aerovate Therapeutics.
Diversification Opportunities for Erasca and Aerovate Therapeutics
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Erasca and Aerovate is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and Aerovate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aerovate Therapeutics and Erasca 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 Erasca Inc are associated (or correlated) with Aerovate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aerovate Therapeutics has no effect on the direction of Erasca i.e., Erasca and Aerovate Therapeutics go up and down completely randomly.
Pair Corralation between Erasca and Aerovate Therapeutics
Given the investment horizon of 90 days Erasca is expected to generate 3.34 times less return on investment than Aerovate Therapeutics. But when comparing it to its historical volatility, Erasca Inc is 1.12 times less risky than Aerovate Therapeutics. It trades about 0.08 of its potential returns per unit of risk. Aerovate Therapeutics is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 218.00 in Aerovate Therapeutics on August 29, 2024 and sell it today you would earn a total of 50.00 from holding Aerovate Therapeutics or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erasca Inc vs. Aerovate Therapeutics
Performance |
| Timeline |
| Erasca Inc |
| Aerovate Therapeutics |
Erasca and Aerovate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erasca and Aerovate Therapeutics
The main advantage of trading using opposite Erasca and Aerovate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca position performs unexpectedly, Aerovate 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 Aerovate Therapeutics will offset losses from the drop in Aerovate Therapeutics' long position.| Erasca vs. Eliem Therapeutics | Erasca vs. Scpharmaceuticals | Erasca vs. Milestone Pharmaceuticals | Erasca vs. Seres Therapeutics |
| Aerovate Therapeutics vs. Eliem Therapeutics | Aerovate Therapeutics vs. Scpharmaceuticals | Aerovate Therapeutics vs. Milestone Pharmaceuticals | Aerovate Therapeutics vs. Seres Therapeutics |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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