Correlation Between Magenta Therapeutics and First Wave
Can any of the company-specific risk be diversified away by investing in both Magenta Therapeutics and First Wave 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 First Wave into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magenta Therapeutics and First Wave BioPharma, you can compare the effects of market volatilities on Magenta Therapeutics and First Wave 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 First Wave. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magenta Therapeutics and First Wave.
Diversification Opportunities for Magenta Therapeutics and First Wave
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magenta and First is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Magenta Therapeutics and First Wave BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Wave BioPharma 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 First Wave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Wave BioPharma has no effect on the direction of Magenta Therapeutics i.e., Magenta Therapeutics and First Wave go up and down completely randomly.
Pair Corralation between Magenta Therapeutics and First Wave
If you would invest 61.00 in First Wave BioPharma on August 25, 2024 and sell it today you would earn a total of 0.00 from holding First Wave BioPharma or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magenta Therapeutics vs. First Wave BioPharma
Performance |
| Timeline |
| Magenta Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| First Wave BioPharma |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Magenta Therapeutics and First Wave Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magenta Therapeutics and First Wave
The main advantage of trading using opposite Magenta Therapeutics and First Wave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magenta Therapeutics position performs unexpectedly, First Wave 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 First Wave will offset losses from the drop in First Wave's long position.| Magenta Therapeutics vs. Assembly Biosciences | Magenta Therapeutics vs. Instil Bio | Magenta Therapeutics vs. Nuvation Bio | Magenta Therapeutics vs. Achilles Therapeutics PLC |
| First Wave vs. Quoin Pharmaceuticals Ltd | First Wave vs. Revelation Biosciences | First Wave vs. Dermata Therapeutics | First Wave vs. LMF Acquisition Opportunities |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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