Correlation Between NextCure and Generation Bio
Can any of the company-specific risk be diversified away by investing in both NextCure and Generation 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 NextCure and Generation Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextCure and Generation Bio Co, you can compare the effects of market volatilities on NextCure and Generation 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 NextCure with a short position of Generation Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextCure and Generation Bio.
Diversification Opportunities for NextCure and Generation Bio
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NextCure and Generation is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Generation Bio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Bio and NextCure 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 NextCure are associated (or correlated) with Generation Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Bio has no effect on the direction of NextCure i.e., NextCure and Generation Bio go up and down completely randomly.
Pair Corralation between NextCure and Generation Bio
Given the investment horizon of 90 days NextCure is expected to generate 0.63 times more return on investment than Generation Bio. However, NextCure is 1.58 times less risky than Generation Bio. It trades about -0.04 of its potential returns per unit of risk. Generation Bio Co is currently generating about -0.05 per unit of risk. If you would invest 165.00 in NextCure on September 3, 2024 and sell it today you would lose (48.00) from holding NextCure or give up 29.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextCure vs. Generation Bio Co
Performance |
| Timeline |
| NextCure |
| Generation Bio |
NextCure and Generation Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextCure and Generation Bio
The main advantage of trading using opposite NextCure and Generation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextCure position performs unexpectedly, Generation 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 Generation Bio will offset losses from the drop in Generation Bio's long position.| NextCure vs. DiaMedica Therapeutics | NextCure vs. Lyra Therapeutics | NextCure vs. Centessa Pharmaceuticals PLC |
| Generation Bio vs. Monte Rosa Therapeutics | Generation Bio vs. Nkarta Inc | Generation Bio vs. Lyell Immunopharma | Generation Bio vs. Sana Biotechnology |
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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