Correlation Between Lantern Pharma and Passage Bio
Can any of the company-specific risk be diversified away by investing in both Lantern Pharma and Passage 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 Lantern Pharma and Passage Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lantern Pharma and Passage Bio, you can compare the effects of market volatilities on Lantern Pharma and Passage 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 Lantern Pharma with a short position of Passage Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lantern Pharma and Passage Bio.
Diversification Opportunities for Lantern Pharma and Passage Bio
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Lantern and Passage is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Lantern Pharma and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage Bio and Lantern Pharma 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 Lantern Pharma are associated (or correlated) with Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of Lantern Pharma i.e., Lantern Pharma and Passage Bio go up and down completely randomly.
Pair Corralation between Lantern Pharma and Passage Bio
Given the investment horizon of 90 days Lantern Pharma is expected to generate 17.5 times less return on investment than Passage Bio. But when comparing it to its historical volatility, Lantern Pharma is 3.63 times less risky than Passage Bio. It trades about 0.05 of its potential returns per unit of risk. Passage Bio is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 62.00 in Passage Bio on September 1, 2024 and sell it today you would earn a total of 51.00 from holding Passage Bio or generate 82.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lantern Pharma vs. Passage Bio
Performance |
| Timeline |
| Lantern Pharma |
| Passage Bio |
Lantern Pharma and Passage Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lantern Pharma and Passage Bio
The main advantage of trading using opposite Lantern Pharma and Passage Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lantern Pharma position performs unexpectedly, Passage 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 Passage Bio will offset losses from the drop in Passage Bio's long position.| Lantern Pharma vs. Cue Biopharma | Lantern Pharma vs. Tff Pharmaceuticals | Lantern Pharma vs. Eliem Therapeutics | Lantern Pharma vs. Inhibrx |
| Passage Bio vs. Cue Biopharma | Passage Bio vs. Tff Pharmaceuticals | Passage Bio vs. Eliem Therapeutics | Passage Bio vs. Inhibrx |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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