Correlation Between Lumia and Shattuck Labs
Can any of the company-specific risk be diversified away by investing in both Lumia and Shattuck Labs 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 Lumia and Shattuck Labs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lumia and Shattuck Labs, you can compare the effects of market volatilities on Lumia and Shattuck Labs 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 Lumia with a short position of Shattuck Labs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lumia and Shattuck Labs.
Diversification Opportunities for Lumia and Shattuck Labs
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Lumia and Shattuck is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Shattuck Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shattuck Labs and Lumia 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 Lumia are associated (or correlated) with Shattuck Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shattuck Labs has no effect on the direction of Lumia i.e., Lumia and Shattuck Labs go up and down completely randomly.
Pair Corralation between Lumia and Shattuck Labs
Assuming the 90 days trading horizon Lumia is expected to under-perform the Shattuck Labs. In addition to that, Lumia is 1.25 times more volatile than Shattuck Labs. It trades about -0.14 of its total potential returns per unit of risk. Shattuck Labs is currently generating about 0.08 per unit of volatility. If you would invest 104.00 in Shattuck Labs on October 20, 2024 and sell it today you would earn a total of 7.00 from holding Shattuck Labs or generate 6.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
Lumia vs. Shattuck Labs
Performance |
| Timeline |
| Lumia |
| Shattuck Labs |
Lumia and Shattuck Labs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lumia and Shattuck Labs
The main advantage of trading using opposite Lumia and Shattuck Labs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lumia position performs unexpectedly, Shattuck Labs 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 Shattuck Labs will offset losses from the drop in Shattuck Labs' long position.The idea behind Lumia and Shattuck Labs 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.| Shattuck Labs vs. C4 Therapeutics | Shattuck Labs vs. Prelude Therapeutics | Shattuck Labs vs. Monte Rosa Therapeutics | Shattuck Labs vs. Foghorn 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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