Correlation Between Graphite Bio and Foghorn Therapeutics
Can any of the company-specific risk be diversified away by investing in both Graphite Bio and Foghorn 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 Graphite Bio and Foghorn Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphite Bio and Foghorn Therapeutics, you can compare the effects of market volatilities on Graphite Bio and Foghorn 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 Graphite Bio with a short position of Foghorn Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphite Bio and Foghorn Therapeutics.
Diversification Opportunities for Graphite Bio and Foghorn Therapeutics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Graphite and Foghorn is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Graphite Bio and Foghorn Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foghorn Therapeutics and Graphite 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 Graphite Bio are associated (or correlated) with Foghorn Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foghorn Therapeutics has no effect on the direction of Graphite Bio i.e., Graphite Bio and Foghorn Therapeutics go up and down completely randomly.
Pair Corralation between Graphite Bio and Foghorn Therapeutics
Given the investment horizon of 90 days Graphite Bio is expected to under-perform the Foghorn Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Graphite Bio is 2.79 times less risky than Foghorn Therapeutics. The stock trades about -0.07 of its potential returns per unit of risk. The Foghorn Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 810.00 in Foghorn Therapeutics on September 1, 2024 and sell it today you would lose (11.00) from holding Foghorn Therapeutics or give up 1.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 8.33% |
| Values | Daily Returns |
Graphite Bio vs. Foghorn Therapeutics
Performance |
| Timeline |
| Graphite Bio |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Foghorn Therapeutics |
Graphite Bio and Foghorn Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphite Bio and Foghorn Therapeutics
The main advantage of trading using opposite Graphite Bio and Foghorn Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphite Bio position performs unexpectedly, Foghorn 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 Foghorn Therapeutics will offset losses from the drop in Foghorn Therapeutics' long position.| Graphite Bio vs. Assembly Biosciences | Graphite Bio vs. Instil Bio | Graphite Bio vs. Nuvation Bio | Graphite Bio vs. Achilles Therapeutics PLC |
| Foghorn Therapeutics vs. C4 Therapeutics | Foghorn Therapeutics vs. Prelude Therapeutics | Foghorn Therapeutics vs. Rezolute | Foghorn Therapeutics vs. Shattuck Labs |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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