Correlation Between NextCure and Spero Therapeutics
Can any of the company-specific risk be diversified away by investing in both NextCure and Spero 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 NextCure and Spero Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NextCure and Spero Therapeutics, you can compare the effects of market volatilities on NextCure and Spero 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 NextCure with a short position of Spero Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of NextCure and Spero Therapeutics.
Diversification Opportunities for NextCure and Spero Therapeutics
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NextCure and Spero is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NextCure and Spero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spero Therapeutics 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 Spero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spero Therapeutics has no effect on the direction of NextCure i.e., NextCure and Spero Therapeutics go up and down completely randomly.
Pair Corralation between NextCure and Spero Therapeutics
Given the investment horizon of 90 days NextCure is expected to under-perform the Spero Therapeutics. In addition to that, NextCure is 1.45 times more volatile than Spero Therapeutics. It trades about -0.11 of its total potential returns per unit of risk. Spero Therapeutics is currently generating about -0.09 per unit of volatility. If you would invest 136.00 in Spero Therapeutics on August 26, 2024 and sell it today you would lose (20.00) from holding Spero Therapeutics or give up 14.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NextCure vs. Spero Therapeutics
Performance |
| Timeline |
| NextCure |
| Spero Therapeutics |
NextCure and Spero Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NextCure and Spero Therapeutics
The main advantage of trading using opposite NextCure and Spero Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NextCure position performs unexpectedly, Spero 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 Spero Therapeutics will offset losses from the drop in Spero Therapeutics' long position.| NextCure vs. CytomX Therapeutics | NextCure vs. Spero Therapeutics | NextCure vs. Instil Bio | NextCure vs. Assembly Biosciences |
| Spero Therapeutics vs. Eliem Therapeutics | Spero Therapeutics vs. HCW Biologics | Spero Therapeutics vs. Scpharmaceuticals | Spero Therapeutics vs. Milestone 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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