Correlation Between EXACT Sciences and Castle Biosciences
Can any of the company-specific risk be diversified away by investing in both EXACT Sciences and Castle Biosciences 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 EXACT Sciences and Castle Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EXACT Sciences and Castle Biosciences, you can compare the effects of market volatilities on EXACT Sciences and Castle Biosciences 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 EXACT Sciences with a short position of Castle Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of EXACT Sciences and Castle Biosciences.
Diversification Opportunities for EXACT Sciences and Castle Biosciences
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EXACT and Castle is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding EXACT Sciences and Castle Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Castle Biosciences and EXACT Sciences 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 EXACT Sciences are associated (or correlated) with Castle Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Castle Biosciences has no effect on the direction of EXACT Sciences i.e., EXACT Sciences and Castle Biosciences go up and down completely randomly.
Pair Corralation between EXACT Sciences and Castle Biosciences
Given the investment horizon of 90 days EXACT Sciences is expected to under-perform the Castle Biosciences. In addition to that, EXACT Sciences is 1.62 times more volatile than Castle Biosciences. It trades about -0.15 of its total potential returns per unit of risk. Castle Biosciences is currently generating about -0.11 per unit of volatility. If you would invest 3,240 in Castle Biosciences on August 28, 2024 and sell it today you would lose (289.00) from holding Castle Biosciences or give up 8.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EXACT Sciences vs. Castle Biosciences
Performance |
| Timeline |
| EXACT Sciences |
| Castle Biosciences |
EXACT Sciences and Castle Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EXACT Sciences and Castle Biosciences
The main advantage of trading using opposite EXACT Sciences and Castle Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EXACT Sciences position performs unexpectedly, Castle Biosciences 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 Castle Biosciences will offset losses from the drop in Castle Biosciences' long position.| EXACT Sciences vs. Eliem Therapeutics | EXACT Sciences vs. HCW Biologics | EXACT Sciences vs. Scpharmaceuticals | EXACT Sciences vs. Milestone Pharmaceuticals |
| Castle Biosciences vs. Caredx Inc | Castle Biosciences vs. Twist Bioscience Corp | Castle Biosciences vs. Biodesix | Castle Biosciences vs. Natera 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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