Correlation Between Fortress Biotech and Cidara Therapeutics
Can any of the company-specific risk be diversified away by investing in both Fortress Biotech and Cidara 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 Fortress Biotech and Cidara Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortress Biotech and Cidara Therapeutics, you can compare the effects of market volatilities on Fortress Biotech and Cidara 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 Fortress Biotech with a short position of Cidara Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and Cidara Therapeutics.
Diversification Opportunities for Fortress Biotech and Cidara Therapeutics
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Fortress and Cidara is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech and Cidara Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cidara Therapeutics and Fortress Biotech 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 Fortress Biotech are associated (or correlated) with Cidara Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cidara Therapeutics has no effect on the direction of Fortress Biotech i.e., Fortress Biotech and Cidara Therapeutics go up and down completely randomly.
Pair Corralation between Fortress Biotech and Cidara Therapeutics
Given the investment horizon of 90 days Fortress Biotech is expected to under-perform the Cidara Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Fortress Biotech is 9.69 times less risky than Cidara Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Cidara Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 965.00 in Cidara Therapeutics on August 29, 2024 and sell it today you would earn a total of 994.00 from holding Cidara Therapeutics or generate 103.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortress Biotech vs. Cidara Therapeutics
Performance |
| Timeline |
| Fortress Biotech |
| Cidara Therapeutics |
Fortress Biotech and Cidara Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Biotech and Cidara Therapeutics
The main advantage of trading using opposite Fortress Biotech and Cidara Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech position performs unexpectedly, Cidara 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 Cidara Therapeutics will offset losses from the drop in Cidara Therapeutics' long position.| Fortress Biotech vs. Mustang Bio | Fortress Biotech vs. Achilles Therapeutics PLC | Fortress Biotech vs. Aptose Biosciences | Fortress Biotech vs. Fortress Biotech Pref |
| Cidara Therapeutics vs. Eliem Therapeutics | Cidara Therapeutics vs. Scpharmaceuticals | Cidara Therapeutics vs. Milestone Pharmaceuticals | Cidara Therapeutics vs. Seres 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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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