Correlation Between Magenta Therapeutics and VectivBio Holding
Can any of the company-specific risk be diversified away by investing in both Magenta Therapeutics and VectivBio Holding 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 VectivBio Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magenta Therapeutics and VectivBio Holding AG, you can compare the effects of market volatilities on Magenta Therapeutics and VectivBio Holding 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 VectivBio Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magenta Therapeutics and VectivBio Holding.
Diversification Opportunities for Magenta Therapeutics and VectivBio Holding
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Magenta and VectivBio is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Magenta Therapeutics and VectivBio Holding AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VectivBio Holding 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 VectivBio Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VectivBio Holding has no effect on the direction of Magenta Therapeutics i.e., Magenta Therapeutics and VectivBio Holding go up and down completely randomly.
Pair Corralation between Magenta Therapeutics and VectivBio Holding
Given the investment horizon of 90 days Magenta Therapeutics is expected to generate 2.95 times more return on investment than VectivBio Holding. However, Magenta Therapeutics is 2.95 times more volatile than VectivBio Holding AG. It trades about 0.16 of its potential returns per unit of risk. VectivBio Holding AG is currently generating about 0.05 per unit of risk. If you would invest 72.00 in Magenta Therapeutics on August 31, 2024 and sell it today you would earn a total of 10.00 from holding Magenta Therapeutics or generate 13.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 71.88% |
| Values | Daily Returns |
Magenta Therapeutics vs. VectivBio Holding AG
Performance |
| Timeline |
| Magenta Therapeutics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| VectivBio Holding |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Magenta Therapeutics and VectivBio Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magenta Therapeutics and VectivBio Holding
The main advantage of trading using opposite Magenta Therapeutics and VectivBio Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magenta Therapeutics position performs unexpectedly, VectivBio Holding 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 VectivBio Holding will offset losses from the drop in VectivBio Holding's long position.| Magenta Therapeutics vs. Assembly Biosciences | Magenta Therapeutics vs. Instil Bio | Magenta Therapeutics vs. Nuvation Bio | Magenta Therapeutics vs. Achilles Therapeutics PLC |
| VectivBio Holding vs. Cns Pharmaceuticals | VectivBio Holding vs. ZyVersa Therapeutics | VectivBio Holding vs. Immix Biopharma | VectivBio Holding vs. Hepion Pharmaceuticals |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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