Correlation Between Northwest Biotherapeutics and Lumos Pharma
Can any of the company-specific risk be diversified away by investing in both Northwest Biotherapeutics and Lumos Pharma 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 Northwest Biotherapeutics and Lumos Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northwest Biotherapeutics and Lumos Pharma, you can compare the effects of market volatilities on Northwest Biotherapeutics and Lumos Pharma 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 Northwest Biotherapeutics with a short position of Lumos Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northwest Biotherapeutics and Lumos Pharma.
Diversification Opportunities for Northwest Biotherapeutics and Lumos Pharma
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northwest and Lumos is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Biotherapeutics and Lumos Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lumos Pharma and Northwest Biotherapeutics 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 Northwest Biotherapeutics are associated (or correlated) with Lumos Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lumos Pharma has no effect on the direction of Northwest Biotherapeutics i.e., Northwest Biotherapeutics and Lumos Pharma go up and down completely randomly.
Pair Corralation between Northwest Biotherapeutics and Lumos Pharma
Given the investment horizon of 90 days Northwest Biotherapeutics is expected to under-perform the Lumos Pharma. But the otc stock apears to be less risky and, when comparing its historical volatility, Northwest Biotherapeutics is 1.04 times less risky than Lumos Pharma. The otc stock trades about -0.02 of its potential returns per unit of risk. The Lumos Pharma is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 317.00 in Lumos Pharma on August 28, 2024 and sell it today you would earn a total of 113.00 from holding Lumos Pharma or generate 35.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northwest Biotherapeutics vs. Lumos Pharma
Performance |
| Timeline |
| Northwest Biotherapeutics |
| Lumos Pharma |
Northwest Biotherapeutics and Lumos Pharma Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northwest Biotherapeutics and Lumos Pharma
The main advantage of trading using opposite Northwest Biotherapeutics and Lumos Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northwest Biotherapeutics position performs unexpectedly, Lumos Pharma 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 Lumos Pharma will offset losses from the drop in Lumos Pharma's long position.The idea behind Northwest Biotherapeutics and Lumos Pharma pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Lumos Pharma vs. Shattuck Labs | Lumos Pharma vs. Eliem Therapeutics | Lumos Pharma vs. Champions Oncology | Lumos Pharma vs. Century 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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