Correlation Between Monte Rosa and Bicycle Therapeutics
Can any of the company-specific risk be diversified away by investing in both Monte Rosa and Bicycle 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 Monte Rosa and Bicycle Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monte Rosa Therapeutics and Bicycle Therapeutics, you can compare the effects of market volatilities on Monte Rosa and Bicycle 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 Monte Rosa with a short position of Bicycle Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monte Rosa and Bicycle Therapeutics.
Diversification Opportunities for Monte Rosa and Bicycle Therapeutics
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monte and Bicycle is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Bicycle Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bicycle Therapeutics and Monte Rosa 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 Monte Rosa Therapeutics are associated (or correlated) with Bicycle Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bicycle Therapeutics has no effect on the direction of Monte Rosa i.e., Monte Rosa and Bicycle Therapeutics go up and down completely randomly.
Pair Corralation between Monte Rosa and Bicycle Therapeutics
Given the investment horizon of 90 days Monte Rosa Therapeutics is expected to generate 2.01 times more return on investment than Bicycle Therapeutics. However, Monte Rosa is 2.01 times more volatile than Bicycle Therapeutics. It trades about -0.08 of its potential returns per unit of risk. Bicycle Therapeutics is currently generating about -0.4 per unit of risk. If you would invest 948.00 in Monte Rosa Therapeutics on August 28, 2024 and sell it today you would lose (102.00) from holding Monte Rosa Therapeutics or give up 10.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monte Rosa Therapeutics vs. Bicycle Therapeutics
Performance |
| Timeline |
| Monte Rosa Therapeutics |
| Bicycle Therapeutics |
Monte Rosa and Bicycle Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monte Rosa and Bicycle Therapeutics
The main advantage of trading using opposite Monte Rosa and Bicycle Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monte Rosa position performs unexpectedly, Bicycle 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 Bicycle Therapeutics will offset losses from the drop in Bicycle Therapeutics' long position.| Monte Rosa vs. Eliem Therapeutics | Monte Rosa vs. HCW Biologics | Monte Rosa vs. Scpharmaceuticals | Monte Rosa vs. Milestone Pharmaceuticals |
| Bicycle Therapeutics vs. Ideaya Biosciences | Bicycle Therapeutics vs. AnaptysBio | Bicycle Therapeutics vs. MeiraGTx Holdings PLC | Bicycle Therapeutics vs. Keros 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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