Correlation Between Ocular Therapeutix and Avenue Therapeutics
Can any of the company-specific risk be diversified away by investing in both Ocular Therapeutix and Avenue 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 Ocular Therapeutix and Avenue Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocular Therapeutix and Avenue Therapeutics, you can compare the effects of market volatilities on Ocular Therapeutix and Avenue 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 Ocular Therapeutix with a short position of Avenue Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocular Therapeutix and Avenue Therapeutics.
Diversification Opportunities for Ocular Therapeutix and Avenue Therapeutics
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ocular and Avenue is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ocular Therapeutix and Avenue Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avenue Therapeutics and Ocular Therapeutix 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 Ocular Therapeutix are associated (or correlated) with Avenue Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avenue Therapeutics has no effect on the direction of Ocular Therapeutix i.e., Ocular Therapeutix and Avenue Therapeutics go up and down completely randomly.
Pair Corralation between Ocular Therapeutix and Avenue Therapeutics
Given the investment horizon of 90 days Ocular Therapeutix is expected to generate 0.34 times more return on investment than Avenue Therapeutics. However, Ocular Therapeutix is 2.96 times less risky than Avenue Therapeutics. It trades about -0.27 of its potential returns per unit of risk. Avenue Therapeutics is currently generating about -0.24 per unit of risk. If you would invest 874.00 in Ocular Therapeutix on November 3, 2024 and sell it today you would lose (104.00) from holding Ocular Therapeutix or give up 11.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Ocular Therapeutix vs. Avenue Therapeutics
Performance |
| Timeline |
| Ocular Therapeutix |
| Avenue Therapeutics |
Ocular Therapeutix and Avenue Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ocular Therapeutix and Avenue Therapeutics
The main advantage of trading using opposite Ocular Therapeutix and Avenue Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocular Therapeutix position performs unexpectedly, Avenue 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 Avenue Therapeutics will offset losses from the drop in Avenue Therapeutics' long position.| Ocular Therapeutix vs. CytomX Therapeutics | Ocular Therapeutix vs. Assembly Biosciences | Ocular Therapeutix vs. Spero Therapeutics | Ocular Therapeutix vs. Achilles Therapeutics PLC |
| Avenue Therapeutics vs. Hoth Therapeutics | Avenue Therapeutics vs. Revelation Biosciences | Avenue Therapeutics vs. Virax Biolabs Group | Avenue Therapeutics vs. Palisade Bio |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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