Correlation Between Lineage Cell and Scholar Rock
Can any of the company-specific risk be diversified away by investing in both Lineage Cell and Scholar Rock 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 Lineage Cell and Scholar Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lineage Cell Therapeutics and Scholar Rock Holding, you can compare the effects of market volatilities on Lineage Cell and Scholar Rock 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 Lineage Cell with a short position of Scholar Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lineage Cell and Scholar Rock.
Diversification Opportunities for Lineage Cell and Scholar Rock
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Lineage and Scholar is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Lineage Cell Therapeutics and Scholar Rock Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholar Rock Holding and Lineage Cell 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 Lineage Cell Therapeutics are associated (or correlated) with Scholar Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholar Rock Holding has no effect on the direction of Lineage Cell i.e., Lineage Cell and Scholar Rock go up and down completely randomly.
Pair Corralation between Lineage Cell and Scholar Rock
Given the investment horizon of 90 days Lineage Cell Therapeutics is expected to generate 1.84 times more return on investment than Scholar Rock. However, Lineage Cell is 1.84 times more volatile than Scholar Rock Holding. It trades about 0.08 of its potential returns per unit of risk. Scholar Rock Holding is currently generating about -0.15 per unit of risk. If you would invest 59.00 in Lineage Cell Therapeutics on November 4, 2024 and sell it today you would earn a total of 4.00 from holding Lineage Cell Therapeutics or generate 6.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lineage Cell Therapeutics vs. Scholar Rock Holding
Performance |
| Timeline |
| Lineage Cell Therapeutics |
| Scholar Rock Holding |
Lineage Cell and Scholar Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lineage Cell and Scholar Rock
The main advantage of trading using opposite Lineage Cell and Scholar Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lineage Cell position performs unexpectedly, Scholar Rock 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 Scholar Rock will offset losses from the drop in Scholar Rock's long position.| Lineage Cell vs. MAIA Biotechnology | Lineage Cell vs. Armata Pharmaceuticals | Lineage Cell vs. Portage Biotech | Lineage Cell vs. Cadrenal Therapeutics, Common |
| Scholar Rock vs. Revolution Medicines | Scholar Rock vs. Black Diamond Therapeutics | Scholar Rock vs. Passage Bio | Scholar Rock vs. Monte Rosa 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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