Correlation Between Graphite Bio and NextCure
Can any of the company-specific risk be diversified away by investing in both Graphite 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 Graphite Bio and NextCure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graphite Bio and NextCure, you can compare the effects of market volatilities on Graphite 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 Graphite Bio with a short position of NextCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graphite Bio and NextCure.
Diversification Opportunities for Graphite Bio and NextCure
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Graphite and NextCure is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Graphite Bio and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure 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 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 Graphite Bio i.e., Graphite Bio and NextCure go up and down completely randomly.
Pair Corralation between Graphite Bio and NextCure
Given the investment horizon of 90 days Graphite Bio is expected to generate 0.8 times more return on investment than NextCure. However, Graphite Bio is 1.25 times less risky than NextCure. It trades about 0.09 of its potential returns per unit of risk. NextCure is currently generating about 0.01 per unit of risk. If you would invest 185.00 in Graphite Bio on August 28, 2024 and sell it today you would earn a total of 82.00 from holding Graphite Bio or generate 44.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 28.78% |
| Values | Daily Returns |
Graphite Bio vs. NextCure
Performance |
| Timeline |
| Graphite Bio |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NextCure |
Graphite Bio and NextCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graphite Bio and NextCure
The main advantage of trading using opposite Graphite Bio and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graphite 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.| Graphite Bio vs. Assembly Biosciences | Graphite Bio vs. Instil Bio | Graphite Bio vs. Nuvation Bio | Graphite Bio vs. Achilles Therapeutics PLC |
| NextCure vs. CytomX Therapeutics | NextCure vs. Spero Therapeutics | NextCure vs. Instil Bio | NextCure vs. Assembly Biosciences |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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