Correlation Between Magenta Therapeutics and Axcella Health
Can any of the company-specific risk be diversified away by investing in both Magenta Therapeutics and Axcella Health 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 Magenta Therapeutics and Axcella Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magenta Therapeutics and Axcella Health, you can compare the effects of market volatilities on Magenta Therapeutics and Axcella Health 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 Magenta Therapeutics with a short position of Axcella Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magenta Therapeutics and Axcella Health.
Diversification Opportunities for Magenta Therapeutics and Axcella Health
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magenta and Axcella is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Magenta Therapeutics and Axcella Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcella Health and Magenta Therapeutics 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 Magenta Therapeutics are associated (or correlated) with Axcella Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcella Health has no effect on the direction of Magenta Therapeutics i.e., Magenta Therapeutics and Axcella Health go up and down completely randomly.
Pair Corralation between Magenta Therapeutics and Axcella Health
If you would invest 20.00 in Axcella Health on August 28, 2024 and sell it today you would earn a total of 0.00 from holding Axcella Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magenta Therapeutics vs. Axcella Health
Performance |
| Timeline |
| Magenta Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Axcella Health |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Magenta Therapeutics and Axcella Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magenta Therapeutics and Axcella Health
The main advantage of trading using opposite Magenta Therapeutics and Axcella Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magenta Therapeutics position performs unexpectedly, Axcella Health 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 Axcella Health will offset losses from the drop in Axcella Health's long position.| Magenta Therapeutics vs. Assembly Biosciences | Magenta Therapeutics vs. Instil Bio | Magenta Therapeutics vs. Nuvation Bio | Magenta Therapeutics vs. Achilles Therapeutics PLC |
| Axcella Health vs. Cyclerion Therapeutics | Axcella Health vs. Kezar Life Sciences | Axcella Health vs. CytomX Therapeutics | Axcella Health vs. Assembly Biosciences |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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