Correlation Between Edgewise Therapeutics and United Therapeutics
Can any of the company-specific risk be diversified away by investing in both Edgewise Therapeutics and United 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 Edgewise Therapeutics and United Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewise Therapeutics and United Therapeutics, you can compare the effects of market volatilities on Edgewise Therapeutics and United 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 Edgewise Therapeutics with a short position of United Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewise Therapeutics and United Therapeutics.
Diversification Opportunities for Edgewise Therapeutics and United Therapeutics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Edgewise and United is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Edgewise Therapeutics and United Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Therapeutics and Edgewise 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 Edgewise Therapeutics are associated (or correlated) with United Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Therapeutics has no effect on the direction of Edgewise Therapeutics i.e., Edgewise Therapeutics and United Therapeutics go up and down completely randomly.
Pair Corralation between Edgewise Therapeutics and United Therapeutics
Given the investment horizon of 90 days Edgewise Therapeutics is expected to generate 2.94 times more return on investment than United Therapeutics. However, Edgewise Therapeutics is 2.94 times more volatile than United Therapeutics. It trades about 0.09 of its potential returns per unit of risk. United Therapeutics is currently generating about 0.15 per unit of risk. If you would invest 1,633 in Edgewise Therapeutics on August 27, 2024 and sell it today you would earn a total of 1,587 from holding Edgewise Therapeutics or generate 97.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewise Therapeutics vs. United Therapeutics
Performance |
| Timeline |
| Edgewise Therapeutics |
| United Therapeutics |
Edgewise Therapeutics and United Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewise Therapeutics and United Therapeutics
The main advantage of trading using opposite Edgewise Therapeutics and United Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewise Therapeutics position performs unexpectedly, United 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 United Therapeutics will offset losses from the drop in United Therapeutics' long position.| Edgewise Therapeutics vs. Eliem Therapeutics | Edgewise Therapeutics vs. HCW Biologics | Edgewise Therapeutics vs. Scpharmaceuticals | Edgewise Therapeutics vs. Milestone Pharmaceuticals |
| United Therapeutics vs. Incyte | United Therapeutics vs. Alnylam Pharmaceuticals | United Therapeutics vs. Ultragenyx | United Therapeutics vs. Apellis 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |