Correlation Between Mustang Bio and Eterna Therapeutics
Can any of the company-specific risk be diversified away by investing in both Mustang Bio and Eterna 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 Mustang Bio and Eterna Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mustang Bio and Eterna Therapeutics, you can compare the effects of market volatilities on Mustang Bio and Eterna 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 Mustang Bio with a short position of Eterna Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustang Bio and Eterna Therapeutics.
Diversification Opportunities for Mustang Bio and Eterna Therapeutics
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mustang and Eterna is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and Eterna Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eterna Therapeutics and Mustang 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 Mustang Bio are associated (or correlated) with Eterna Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eterna Therapeutics has no effect on the direction of Mustang Bio i.e., Mustang Bio and Eterna Therapeutics go up and down completely randomly.
Pair Corralation between Mustang Bio and Eterna Therapeutics
Given the investment horizon of 90 days Mustang Bio is expected to generate 0.4 times more return on investment than Eterna Therapeutics. However, Mustang Bio is 2.48 times less risky than Eterna Therapeutics. It trades about -0.26 of its potential returns per unit of risk. Eterna Therapeutics is currently generating about -0.49 per unit of risk. If you would invest 22.00 in Mustang Bio on September 19, 2024 and sell it today you would lose (4.00) from holding Mustang Bio or give up 18.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mustang Bio vs. Eterna Therapeutics
Performance |
| Timeline |
| Mustang Bio |
| Eterna Therapeutics |
Mustang Bio and Eterna Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mustang Bio and Eterna Therapeutics
The main advantage of trading using opposite Mustang Bio and Eterna Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mustang Bio position performs unexpectedly, Eterna 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 Eterna Therapeutics will offset losses from the drop in Eterna Therapeutics' long position.The idea behind Mustang Bio and Eterna Therapeutics 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.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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |