Correlation Between Foghorn Therapeutics and Prelude Therapeutics
Can any of the company-specific risk be diversified away by investing in both Foghorn Therapeutics and Prelude 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 Foghorn Therapeutics and Prelude Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foghorn Therapeutics and Prelude Therapeutics, you can compare the effects of market volatilities on Foghorn Therapeutics and Prelude 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 Foghorn Therapeutics with a short position of Prelude Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foghorn Therapeutics and Prelude Therapeutics.
Diversification Opportunities for Foghorn Therapeutics and Prelude Therapeutics
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Foghorn and Prelude is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Foghorn Therapeutics and Prelude Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prelude Therapeutics and Foghorn 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 Foghorn Therapeutics are associated (or correlated) with Prelude Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prelude Therapeutics has no effect on the direction of Foghorn Therapeutics i.e., Foghorn Therapeutics and Prelude Therapeutics go up and down completely randomly.
Pair Corralation between Foghorn Therapeutics and Prelude Therapeutics
Given the investment horizon of 90 days Foghorn Therapeutics is expected to generate 1.1 times more return on investment than Prelude Therapeutics. However, Foghorn Therapeutics is 1.1 times more volatile than Prelude Therapeutics. It trades about -0.07 of its potential returns per unit of risk. Prelude Therapeutics is currently generating about -0.45 per unit of risk. If you would invest 936.00 in Foghorn Therapeutics on August 28, 2024 and sell it today you would lose (146.00) from holding Foghorn Therapeutics or give up 15.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Foghorn Therapeutics vs. Prelude Therapeutics
Performance |
| Timeline |
| Foghorn Therapeutics |
| Prelude Therapeutics |
Foghorn Therapeutics and Prelude Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foghorn Therapeutics and Prelude Therapeutics
The main advantage of trading using opposite Foghorn Therapeutics and Prelude Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foghorn Therapeutics position performs unexpectedly, Prelude 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 Prelude Therapeutics will offset losses from the drop in Prelude Therapeutics' long position.| Foghorn Therapeutics vs. Eliem Therapeutics | Foghorn Therapeutics vs. HCW Biologics | Foghorn Therapeutics vs. Scpharmaceuticals | Foghorn Therapeutics vs. Milestone Pharmaceuticals |
| Prelude Therapeutics vs. Foghorn Therapeutics | Prelude Therapeutics vs. Shattuck Labs | Prelude Therapeutics vs. Monte Rosa Therapeutics | Prelude Therapeutics vs. Kymera 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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