Correlation Between Erasca and Cingulate
Can any of the company-specific risk be diversified away by investing in both Erasca and Cingulate 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 Cingulate into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erasca Inc and Cingulate, you can compare the effects of market volatilities on Erasca and Cingulate 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 Cingulate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erasca and Cingulate.
Diversification Opportunities for Erasca and Cingulate
Poor diversification
The 3 months correlation between Erasca and Cingulate is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate 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 Cingulate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate has no effect on the direction of Erasca i.e., Erasca and Cingulate go up and down completely randomly.
Pair Corralation between Erasca and Cingulate
Given the investment horizon of 90 days Erasca Inc is expected to under-perform the Cingulate. In addition to that, Erasca is 2.06 times more volatile than Cingulate. It trades about -0.07 of its total potential returns per unit of risk. Cingulate is currently generating about 0.12 per unit of volatility. If you would invest 370.00 in Cingulate on January 14, 2025 and sell it today you would earn a total of 32.00 from holding Cingulate or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Erasca Inc vs. Cingulate
Performance |
| Timeline |
| Erasca Inc |
| Cingulate |
Erasca and Cingulate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erasca and Cingulate
The main advantage of trading using opposite Erasca and Cingulate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca position performs unexpectedly, Cingulate 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 Cingulate will offset losses from the drop in Cingulate's long position.| Erasca vs. Century Therapeutics | Erasca vs. Keros Therapeutics | Erasca vs. Monte Rosa Therapeutics | Erasca vs. Design Therapeutics |
| Cingulate vs. SAB Biotherapeutics | Cingulate vs. Senti Biosciences | Cingulate vs. Aerovate Therapeutics | Cingulate vs. Adagene |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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