Correlation Between Eyepoint Pharmaceuticals and ProQR Therapeutics
Can any of the company-specific risk be diversified away by investing in both Eyepoint Pharmaceuticals and ProQR 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 Eyepoint Pharmaceuticals and ProQR Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eyepoint Pharmaceuticals and ProQR Therapeutics BV, you can compare the effects of market volatilities on Eyepoint Pharmaceuticals and ProQR 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 Eyepoint Pharmaceuticals with a short position of ProQR Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eyepoint Pharmaceuticals and ProQR Therapeutics.
Diversification Opportunities for Eyepoint Pharmaceuticals and ProQR Therapeutics
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eyepoint and ProQR is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Eyepoint Pharmaceuticals and ProQR Therapeutics BV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProQR Therapeutics and Eyepoint Pharmaceuticals 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 Eyepoint Pharmaceuticals are associated (or correlated) with ProQR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProQR Therapeutics has no effect on the direction of Eyepoint Pharmaceuticals i.e., Eyepoint Pharmaceuticals and ProQR Therapeutics go up and down completely randomly.
Pair Corralation between Eyepoint Pharmaceuticals and ProQR Therapeutics
Given the investment horizon of 90 days Eyepoint Pharmaceuticals is expected to generate 1.6 times more return on investment than ProQR Therapeutics. However, Eyepoint Pharmaceuticals is 1.6 times more volatile than ProQR Therapeutics BV. It trades about -0.16 of its potential returns per unit of risk. ProQR Therapeutics BV is currently generating about -0.53 per unit of risk. If you would invest 683.00 in Eyepoint Pharmaceuticals on January 12, 2025 and sell it today you would lose (145.00) from holding Eyepoint Pharmaceuticals or give up 21.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eyepoint Pharmaceuticals vs. ProQR Therapeutics BV
Performance |
| Timeline |
| Eyepoint Pharmaceuticals |
| ProQR Therapeutics |
Eyepoint Pharmaceuticals and ProQR Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eyepoint Pharmaceuticals and ProQR Therapeutics
The main advantage of trading using opposite Eyepoint Pharmaceuticals and ProQR Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eyepoint Pharmaceuticals position performs unexpectedly, ProQR 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 ProQR Therapeutics will offset losses from the drop in ProQR Therapeutics' long position.The idea behind Eyepoint Pharmaceuticals and ProQR Therapeutics BV pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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