Correlation Between Generation Bio and Black Diamond
Can any of the company-specific risk be diversified away by investing in both Generation Bio and Black Diamond 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 Generation Bio and Black Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Generation Bio Co and Black Diamond Therapeutics, you can compare the effects of market volatilities on Generation Bio and Black Diamond 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 Generation Bio with a short position of Black Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Bio and Black Diamond.
Diversification Opportunities for Generation Bio and Black Diamond
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Generation and Black is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Generation Bio Co and Black Diamond Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Therap and Generation Bio 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 Generation Bio Co are associated (or correlated) with Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Therap has no effect on the direction of Generation Bio i.e., Generation Bio and Black Diamond go up and down completely randomly.
Pair Corralation between Generation Bio and Black Diamond
Given the investment horizon of 90 days Generation Bio Co is expected to under-perform the Black Diamond. But the stock apears to be less risky and, when comparing its historical volatility, Generation Bio Co is 1.46 times less risky than Black Diamond. The stock trades about -0.34 of its potential returns per unit of risk. The Black Diamond Therapeutics is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 214.00 in Black Diamond Therapeutics on November 2, 2024 and sell it today you would earn a total of 38.00 from holding Black Diamond Therapeutics or generate 17.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Generation Bio Co vs. Black Diamond Therapeutics
Performance |
| Timeline |
| Generation Bio |
| Black Diamond Therap |
Generation Bio and Black Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generation Bio and Black Diamond
The main advantage of trading using opposite Generation Bio and Black Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation Bio position performs unexpectedly, Black Diamond 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 Black Diamond will offset losses from the drop in Black Diamond's long position.| Generation Bio vs. Monte Rosa Therapeutics | Generation Bio vs. Nkarta Inc | Generation Bio vs. Lyell Immunopharma | Generation Bio vs. Sana Biotechnology |
| Black Diamond vs. Passage Bio | Black Diamond vs. Alector | Black Diamond vs. Revolution Medicines | Black Diamond vs. Stoke 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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