Correlation Between MeiraGTx Holdings and SpringWorks Therapeutics
Can any of the company-specific risk be diversified away by investing in both MeiraGTx Holdings and SpringWorks 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 MeiraGTx Holdings and SpringWorks Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MeiraGTx Holdings PLC and SpringWorks Therapeutics, you can compare the effects of market volatilities on MeiraGTx Holdings and SpringWorks 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 MeiraGTx Holdings with a short position of SpringWorks Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MeiraGTx Holdings and SpringWorks Therapeutics.
Diversification Opportunities for MeiraGTx Holdings and SpringWorks Therapeutics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MeiraGTx and SpringWorks is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding MeiraGTx Holdings PLC and SpringWorks Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpringWorks Therapeutics and MeiraGTx Holdings 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 MeiraGTx Holdings PLC are associated (or correlated) with SpringWorks Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpringWorks Therapeutics has no effect on the direction of MeiraGTx Holdings i.e., MeiraGTx Holdings and SpringWorks Therapeutics go up and down completely randomly.
Pair Corralation between MeiraGTx Holdings and SpringWorks Therapeutics
Given the investment horizon of 90 days MeiraGTx Holdings is expected to generate 3.26 times less return on investment than SpringWorks Therapeutics. But when comparing it to its historical volatility, MeiraGTx Holdings PLC is 2.58 times less risky than SpringWorks Therapeutics. It trades about 0.25 of its potential returns per unit of risk. SpringWorks Therapeutics is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 3,582 in SpringWorks Therapeutics on November 27, 2024 and sell it today you would earn a total of 2,074 from holding SpringWorks Therapeutics or generate 57.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MeiraGTx Holdings PLC vs. SpringWorks Therapeutics
Performance |
| Timeline |
| MeiraGTx Holdings PLC |
| SpringWorks Therapeutics |
MeiraGTx Holdings and SpringWorks Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MeiraGTx Holdings and SpringWorks Therapeutics
The main advantage of trading using opposite MeiraGTx Holdings and SpringWorks Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MeiraGTx Holdings position performs unexpectedly, SpringWorks 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 SpringWorks Therapeutics will offset losses from the drop in SpringWorks Therapeutics' long position.| MeiraGTx Holdings vs. Ideaya Biosciences | MeiraGTx Holdings vs. AnaptysBio | MeiraGTx Holdings vs. Keros Therapeutics | MeiraGTx Holdings vs. Uniqure NV |
| SpringWorks Therapeutics vs. Relay Therapeutics | SpringWorks Therapeutics vs. Stoke Therapeutics | SpringWorks Therapeutics vs. Pliant Therapeutics | SpringWorks Therapeutics vs. Black Diamond Therapeutics |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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