Correlation Between Monte Rosa and Erasca
Can any of the company-specific risk be diversified away by investing in both Monte Rosa and Erasca 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 Erasca 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 Erasca Inc, you can compare the effects of market volatilities on Monte Rosa and Erasca 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 Erasca. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monte Rosa and Erasca.
Diversification Opportunities for Monte Rosa and Erasca
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monte and Erasca is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc 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 Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Monte Rosa i.e., Monte Rosa and Erasca go up and down completely randomly.
Pair Corralation between Monte Rosa and Erasca
Given the investment horizon of 90 days Monte Rosa Therapeutics is expected to generate 2.44 times more return on investment than Erasca. However, Monte Rosa is 2.44 times more volatile than Erasca Inc. It trades about 0.05 of its potential returns per unit of risk. Erasca Inc is currently generating about -0.06 per unit of risk. If you would invest 582.00 in Monte Rosa Therapeutics on November 2, 2024 and sell it today you would earn a total of 63.00 from holding Monte Rosa Therapeutics or generate 10.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monte Rosa Therapeutics vs. Erasca Inc
Performance |
| Timeline |
| Monte Rosa Therapeutics |
| Erasca Inc |
Monte Rosa and Erasca Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monte Rosa and Erasca
The main advantage of trading using opposite Monte Rosa and Erasca positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monte Rosa position performs unexpectedly, Erasca 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 Erasca will offset losses from the drop in Erasca's long position.| Monte Rosa vs. Nkarta Inc | Monte Rosa vs. Lyell Immunopharma | Monte Rosa vs. Generation Bio Co | Monte Rosa vs. Sana Biotechnology |
| Erasca vs. Century Therapeutics | Erasca vs. Keros Therapeutics | Erasca vs. Monte Rosa Therapeutics | Erasca vs. Design 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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