Correlation Between Eterna Therapeutics and Avantor
Can any of the company-specific risk be diversified away by investing in both Eterna Therapeutics and Avantor 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 Eterna Therapeutics and Avantor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eterna Therapeutics and Avantor, you can compare the effects of market volatilities on Eterna Therapeutics and Avantor 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 Eterna Therapeutics with a short position of Avantor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eterna Therapeutics and Avantor.
Diversification Opportunities for Eterna Therapeutics and Avantor
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eterna and Avantor is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eterna Therapeutics and Avantor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantor and Eterna 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 Eterna Therapeutics are associated (or correlated) with Avantor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantor has no effect on the direction of Eterna Therapeutics i.e., Eterna Therapeutics and Avantor go up and down completely randomly.
Pair Corralation between Eterna Therapeutics and Avantor
Given the investment horizon of 90 days Eterna Therapeutics is expected to under-perform the Avantor. In addition to that, Eterna Therapeutics is 4.36 times more volatile than Avantor. It trades about -0.63 of its total potential returns per unit of risk. Avantor is currently generating about -0.18 per unit of volatility. If you would invest 2,237 in Avantor on September 1, 2024 and sell it today you would lose (131.00) from holding Avantor or give up 5.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eterna Therapeutics vs. Avantor
Performance |
| Timeline |
| Eterna Therapeutics |
| Avantor |
Eterna Therapeutics and Avantor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eterna Therapeutics and Avantor
The main advantage of trading using opposite Eterna Therapeutics and Avantor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eterna Therapeutics position performs unexpectedly, Avantor 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 Avantor will offset losses from the drop in Avantor's long position.| Eterna Therapeutics vs. Cue Biopharma | Eterna Therapeutics vs. Tff Pharmaceuticals | Eterna Therapeutics vs. Lantern Pharma | Eterna Therapeutics vs. Eliem Therapeutics |
| Avantor vs. Ashland Global Holdings | Avantor vs. H B Fuller | Avantor vs. Element Solutions | Avantor vs. Balchem |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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