Correlation Between 4D Molecular and Evogene
Can any of the company-specific risk be diversified away by investing in both 4D Molecular and Evogene 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 4D Molecular and Evogene into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 4D Molecular Therapeutics and Evogene, you can compare the effects of market volatilities on 4D Molecular and Evogene 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 4D Molecular with a short position of Evogene. Check out your portfolio center. Please also check ongoing floating volatility patterns of 4D Molecular and Evogene.
Diversification Opportunities for 4D Molecular and Evogene
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between FDMT and Evogene is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding 4D Molecular Therapeutics and Evogene in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evogene and 4D Molecular 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 4D Molecular Therapeutics are associated (or correlated) with Evogene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evogene has no effect on the direction of 4D Molecular i.e., 4D Molecular and Evogene go up and down completely randomly.
Pair Corralation between 4D Molecular and Evogene
Given the investment horizon of 90 days 4D Molecular Therapeutics is expected to generate 1.07 times more return on investment than Evogene. However, 4D Molecular is 1.07 times more volatile than Evogene. It trades about -0.13 of its potential returns per unit of risk. Evogene is currently generating about -0.21 per unit of risk. If you would invest 2,473 in 4D Molecular Therapeutics on September 1, 2024 and sell it today you would lose (1,689) from holding 4D Molecular Therapeutics or give up 68.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
4D Molecular Therapeutics vs. Evogene
Performance |
| Timeline |
| 4D Molecular Therapeutics |
| Evogene |
4D Molecular and Evogene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 4D Molecular and Evogene
The main advantage of trading using opposite 4D Molecular and Evogene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 4D Molecular position performs unexpectedly, Evogene 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 Evogene will offset losses from the drop in Evogene's long position.| 4D Molecular vs. Tff Pharmaceuticals | 4D Molecular vs. Eliem Therapeutics | 4D Molecular vs. Inhibrx | 4D Molecular vs. Enliven Therapeutics |
| Evogene vs. Arcus Biosciences | Evogene vs. Fate Therapeutics | Evogene vs. Pluri Inc | Evogene vs. Lexaria Bioscience Corp |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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