Correlation Between Mustang Bio and Verrica Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Mustang Bio and Verrica Pharmaceuticals 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 Verrica Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mustang Bio and Verrica Pharmaceuticals, you can compare the effects of market volatilities on Mustang Bio and Verrica Pharmaceuticals 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 Verrica Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustang Bio and Verrica Pharmaceuticals.
Diversification Opportunities for Mustang Bio and Verrica Pharmaceuticals
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mustang and Verrica is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and Verrica Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Verrica Pharmaceuticals 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 Verrica Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Verrica Pharmaceuticals has no effect on the direction of Mustang Bio i.e., Mustang Bio and Verrica Pharmaceuticals go up and down completely randomly.
Pair Corralation between Mustang Bio and Verrica Pharmaceuticals
Given the investment horizon of 90 days Mustang Bio is expected to generate 1.32 times more return on investment than Verrica Pharmaceuticals. However, Mustang Bio is 1.32 times more volatile than Verrica Pharmaceuticals. It trades about 0.12 of its potential returns per unit of risk. Verrica Pharmaceuticals is currently generating about -0.4 per unit of risk. If you would invest 19.00 in Mustang Bio on October 9, 2024 and sell it today you would earn a total of 2.00 from holding Mustang Bio or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mustang Bio vs. Verrica Pharmaceuticals
Performance |
| Timeline |
| Mustang Bio |
| Verrica Pharmaceuticals |
Mustang Bio and Verrica Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mustang Bio and Verrica Pharmaceuticals
The main advantage of trading using opposite Mustang Bio and Verrica Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mustang Bio position performs unexpectedly, Verrica Pharmaceuticals 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 Verrica Pharmaceuticals will offset losses from the drop in Verrica Pharmaceuticals' long position.| Mustang Bio vs. Checkpoint Therapeutics | Mustang Bio vs. Reviva Pharmaceuticals Holdings | Mustang Bio vs. Fortress Biotech Pref | Mustang Bio vs. Kodiak Sciences |
| Verrica Pharmaceuticals vs. Inventiva Sa | Verrica Pharmaceuticals vs. Edgewise Therapeutics | Verrica Pharmaceuticals vs. Vigil Neuroscience | Verrica Pharmaceuticals vs. Connect Biopharma Holdings |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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