Correlation Between Magenta Therapeutics and Graphite Bio
Can any of the company-specific risk be diversified away by investing in both Magenta Therapeutics and Graphite Bio 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 Graphite Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magenta Therapeutics and Graphite Bio, you can compare the effects of market volatilities on Magenta Therapeutics and Graphite Bio 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 Graphite Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magenta Therapeutics and Graphite Bio.
Diversification Opportunities for Magenta Therapeutics and Graphite Bio
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Magenta and Graphite is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Magenta Therapeutics and Graphite Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Graphite Bio 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 Graphite Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Graphite Bio has no effect on the direction of Magenta Therapeutics i.e., Magenta Therapeutics and Graphite Bio go up and down completely randomly.
Pair Corralation between Magenta Therapeutics and Graphite Bio
Given the investment horizon of 90 days Magenta Therapeutics is expected to generate 1.13 times more return on investment than Graphite Bio. However, Magenta Therapeutics is 1.13 times more volatile than Graphite Bio. It trades about 0.2 of its potential returns per unit of risk. Graphite Bio is currently generating about -0.07 per unit of risk. If you would invest 70.00 in Magenta Therapeutics on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Magenta Therapeutics or generate 17.14% 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. Graphite Bio
Performance |
| Timeline |
| Magenta Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Graphite Bio |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Magenta Therapeutics and Graphite Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magenta Therapeutics and Graphite Bio
The main advantage of trading using opposite Magenta Therapeutics and Graphite Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magenta Therapeutics position performs unexpectedly, Graphite Bio 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 Graphite Bio will offset losses from the drop in Graphite Bio's long position.| Magenta Therapeutics vs. Assembly Biosciences | Magenta Therapeutics vs. Instil Bio | Magenta Therapeutics vs. Nuvation Bio | Magenta Therapeutics vs. Achilles Therapeutics PLC |
| Graphite Bio vs. Assembly Biosciences | Graphite Bio vs. Instil Bio | Graphite Bio vs. Nuvation Bio | Graphite Bio vs. Achilles Therapeutics PLC |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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