Correlation Between Monte Rosa and Generation Bio

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Can any of the company-specific risk be diversified away by investing in both Monte Rosa and Generation Bio 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 Generation Bio 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 Generation Bio Co, you can compare the effects of market volatilities on Monte Rosa and Generation Bio 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 Generation Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monte Rosa and Generation Bio.

Diversification Opportunities for Monte Rosa and Generation Bio

-0.42
  Correlation Coefficient

Very good diversification

The 3 months correlation between Monte and Generation is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Monte Rosa Therapeutics and Generation Bio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Bio 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 Generation Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Bio has no effect on the direction of Monte Rosa i.e., Monte Rosa and Generation Bio go up and down completely randomly.

Pair Corralation between Monte Rosa and Generation Bio

Given the investment horizon of 90 days Monte Rosa Therapeutics is expected to generate 1.05 times more return on investment than Generation Bio. However, Monte Rosa is 1.05 times more volatile than Generation Bio Co. It trades about 0.03 of its potential returns per unit of risk. Generation Bio Co is currently generating about -0.01 per unit of risk. If you would invest  764.00  in Monte Rosa Therapeutics on August 27, 2024 and sell it today you would earn a total of  85.00  from holding Monte Rosa Therapeutics or generate 11.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Monte Rosa Therapeutics  vs.  Generation Bio Co

 Performance 
       Timeline  
Monte Rosa Therapeutics 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Monte Rosa Therapeutics are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Monte Rosa exhibited solid returns over the last few months and may actually be approaching a breakup point.
Generation Bio 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Generation Bio Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Monte Rosa and Generation Bio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Monte Rosa and Generation Bio

The main advantage of trading using opposite Monte Rosa and Generation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monte Rosa position performs unexpectedly, Generation Bio 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 Generation Bio will offset losses from the drop in Generation Bio's long position.
The idea behind Monte Rosa Therapeutics and Generation Bio Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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