Correlation Between Generation Bio and NextCure
Can any of the company-specific risk be diversified away by investing in both Generation Bio and NextCure 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 NextCure 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 NextCure, you can compare the effects of market volatilities on Generation Bio and NextCure 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 NextCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Generation Bio and NextCure.
Diversification Opportunities for Generation Bio and NextCure
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Generation and NextCure is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Generation Bio Co and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure 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 NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Generation Bio i.e., Generation Bio and NextCure go up and down completely randomly.
Pair Corralation between Generation Bio and NextCure
Given the investment horizon of 90 days Generation Bio Co is expected to under-perform the NextCure. In addition to that, Generation Bio is 1.58 times more volatile than NextCure. It trades about -0.05 of its total potential returns per unit of risk. NextCure is currently generating about -0.04 per unit of volatility. If you would invest 165.00 in NextCure on September 3, 2024 and sell it today you would lose (48.00) from holding NextCure or give up 29.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Generation Bio Co vs. NextCure
Performance |
| Timeline |
| Generation Bio |
| NextCure |
Generation Bio and NextCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Generation Bio and NextCure
The main advantage of trading using opposite Generation Bio and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Generation Bio position performs unexpectedly, NextCure 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 NextCure will offset losses from the drop in NextCure's long position.| Generation Bio vs. Monte Rosa Therapeutics | Generation Bio vs. Nkarta Inc | Generation Bio vs. Lyell Immunopharma | Generation Bio vs. Sana Biotechnology |
| NextCure vs. DiaMedica Therapeutics | NextCure vs. Lyra Therapeutics | NextCure vs. Centessa Pharmaceuticals PLC |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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