Correlation Between Passage Bio and ADC Therapeutics
Can any of the company-specific risk be diversified away by investing in both Passage Bio and ADC 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 Passage Bio and ADC Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Passage Bio and ADC Therapeutics SA, you can compare the effects of market volatilities on Passage Bio and ADC 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 Passage Bio with a short position of ADC Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Passage Bio and ADC Therapeutics.
Diversification Opportunities for Passage Bio and ADC Therapeutics
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Passage and ADC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and ADC Therapeutics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADC Therapeutics and Passage Bio 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 Passage Bio are associated (or correlated) with ADC Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADC Therapeutics has no effect on the direction of Passage Bio i.e., Passage Bio and ADC Therapeutics go up and down completely randomly.
Pair Corralation between Passage Bio and ADC Therapeutics
Given the investment horizon of 90 days Passage Bio is expected to generate 2.84 times more return on investment than ADC Therapeutics. However, Passage Bio is 2.84 times more volatile than ADC Therapeutics SA. It trades about 0.01 of its potential returns per unit of risk. ADC Therapeutics SA is currently generating about -0.16 per unit of risk. If you would invest 65.00 in Passage Bio on October 20, 2024 and sell it today you would lose (5.00) from holding Passage Bio or give up 7.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Passage Bio vs. ADC Therapeutics SA
Performance |
| Timeline |
| Passage Bio |
| ADC Therapeutics |
Passage Bio and ADC Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Passage Bio and ADC Therapeutics
The main advantage of trading using opposite Passage Bio and ADC Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Passage Bio position performs unexpectedly, ADC 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 ADC Therapeutics will offset losses from the drop in ADC Therapeutics' long position.| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
| ADC Therapeutics vs. Passage Bio | ADC Therapeutics vs. Black Diamond Therapeutics | ADC Therapeutics vs. Alector | ADC Therapeutics 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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