Correlation Between Magenta Therapeutics and DiaMedica Therapeutics
Can any of the company-specific risk be diversified away by investing in both Magenta Therapeutics and DiaMedica 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 Magenta Therapeutics and DiaMedica Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magenta Therapeutics and DiaMedica Therapeutics, you can compare the effects of market volatilities on Magenta Therapeutics and DiaMedica 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 Magenta Therapeutics with a short position of DiaMedica Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magenta Therapeutics and DiaMedica Therapeutics.
Diversification Opportunities for Magenta Therapeutics and DiaMedica Therapeutics
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Magenta and DiaMedica is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magenta Therapeutics and DiaMedica Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DiaMedica Therapeutics 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 DiaMedica Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DiaMedica Therapeutics has no effect on the direction of Magenta Therapeutics i.e., Magenta Therapeutics and DiaMedica Therapeutics go up and down completely randomly.
Pair Corralation between Magenta Therapeutics and DiaMedica Therapeutics
Given the investment horizon of 90 days Magenta Therapeutics is expected to generate 20.49 times less return on investment than DiaMedica Therapeutics. But when comparing it to its historical volatility, Magenta Therapeutics is 1.52 times less risky than DiaMedica Therapeutics. It trades about 0.01 of its potential returns per unit of risk. DiaMedica Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 152.00 in DiaMedica Therapeutics on November 2, 2024 and sell it today you would earn a total of 433.00 from holding DiaMedica Therapeutics or generate 284.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 22.67% |
| Values | Daily Returns |
Magenta Therapeutics vs. DiaMedica Therapeutics
Performance |
| Timeline |
| Magenta Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| DiaMedica Therapeutics |
Magenta Therapeutics and DiaMedica Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magenta Therapeutics and DiaMedica Therapeutics
The main advantage of trading using opposite Magenta Therapeutics and DiaMedica Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magenta Therapeutics position performs unexpectedly, DiaMedica 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 DiaMedica Therapeutics will offset losses from the drop in DiaMedica Therapeutics' long position.| Magenta Therapeutics vs. Assembly Biosciences | Magenta Therapeutics vs. Instil Bio | Magenta Therapeutics vs. Nuvation Bio | Magenta Therapeutics vs. Achilles Therapeutics PLC |
| DiaMedica Therapeutics vs. Milestone Pharmaceuticals | DiaMedica Therapeutics vs. Seres Therapeutics | DiaMedica Therapeutics vs. Inhibikase Therapeutics | DiaMedica Therapeutics vs. Oncolytics Biotech |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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