Correlation Between Fate Therapeutics and Editas Medicine
Can any of the company-specific risk be diversified away by investing in both Fate Therapeutics and Editas Medicine 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 Fate Therapeutics and Editas Medicine into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fate Therapeutics and Editas Medicine, you can compare the effects of market volatilities on Fate Therapeutics and Editas Medicine 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 Fate Therapeutics with a short position of Editas Medicine. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fate Therapeutics and Editas Medicine.
Diversification Opportunities for Fate Therapeutics and Editas Medicine
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Fate and Editas is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Fate Therapeutics and Editas Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Editas Medicine and Fate 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 Fate Therapeutics are associated (or correlated) with Editas Medicine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Editas Medicine has no effect on the direction of Fate Therapeutics i.e., Fate Therapeutics and Editas Medicine go up and down completely randomly.
Pair Corralation between Fate Therapeutics and Editas Medicine
Given the investment horizon of 90 days Fate Therapeutics is expected to generate 1.71 times more return on investment than Editas Medicine. However, Fate Therapeutics is 1.71 times more volatile than Editas Medicine. It trades about -0.12 of its potential returns per unit of risk. Editas Medicine is currently generating about -0.32 per unit of risk. If you would invest 287.00 in Fate Therapeutics on August 27, 2024 and sell it today you would lose (58.00) from holding Fate Therapeutics or give up 20.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fate Therapeutics vs. Editas Medicine
Performance |
| Timeline |
| Fate Therapeutics |
| Editas Medicine |
Fate Therapeutics and Editas Medicine Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fate Therapeutics and Editas Medicine
The main advantage of trading using opposite Fate Therapeutics and Editas Medicine positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fate Therapeutics position performs unexpectedly, Editas Medicine 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 Editas Medicine will offset losses from the drop in Editas Medicine's long position.| Fate Therapeutics vs. Atara Biotherapeutics | Fate Therapeutics vs. Sana Biotechnology | Fate Therapeutics vs. Caribou Biosciences | Fate Therapeutics vs. Arcus Biosciences |
| Editas Medicine vs. Beam Therapeutics | Editas Medicine vs. Crispr Therapeutics AG | Editas Medicine vs. Caribou Biosciences | Editas Medicine vs. Verve Therapeutics |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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