Correlation Between MediciNova and Prelude Therapeutics
Can any of the company-specific risk be diversified away by investing in both MediciNova and Prelude 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 MediciNova and Prelude Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MediciNova and Prelude Therapeutics, you can compare the effects of market volatilities on MediciNova and Prelude 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 MediciNova with a short position of Prelude Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of MediciNova and Prelude Therapeutics.
Diversification Opportunities for MediciNova and Prelude Therapeutics
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MediciNova and Prelude is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding MediciNova and Prelude Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prelude Therapeutics and MediciNova 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 MediciNova are associated (or correlated) with Prelude Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prelude Therapeutics has no effect on the direction of MediciNova i.e., MediciNova and Prelude Therapeutics go up and down completely randomly.
Pair Corralation between MediciNova and Prelude Therapeutics
Given the investment horizon of 90 days MediciNova is expected to generate 2.58 times more return on investment than Prelude Therapeutics. However, MediciNova is 2.58 times more volatile than Prelude Therapeutics. It trades about 0.14 of its potential returns per unit of risk. Prelude Therapeutics is currently generating about -0.41 per unit of risk. If you would invest 163.00 in MediciNova on August 28, 2024 and sell it today you would earn a total of 45.00 from holding MediciNova or generate 27.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MediciNova vs. Prelude Therapeutics
Performance |
| Timeline |
| MediciNova |
| Prelude Therapeutics |
MediciNova and Prelude Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MediciNova and Prelude Therapeutics
The main advantage of trading using opposite MediciNova and Prelude Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MediciNova position performs unexpectedly, Prelude 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 Prelude Therapeutics will offset losses from the drop in Prelude Therapeutics' long position.| MediciNova vs. Eliem Therapeutics | MediciNova vs. Scpharmaceuticals | MediciNova vs. Milestone Pharmaceuticals | MediciNova vs. Seres Therapeutics |
| Prelude Therapeutics vs. Foghorn Therapeutics | Prelude Therapeutics vs. Shattuck Labs | Prelude Therapeutics vs. Monte Rosa Therapeutics | Prelude Therapeutics vs. Kymera 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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