Correlation Between Passage Bio and Black Diamond
Can any of the company-specific risk be diversified away by investing in both Passage Bio and Black Diamond 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 Black Diamond into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Passage Bio and Black Diamond Therapeutics, you can compare the effects of market volatilities on Passage Bio and Black Diamond 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 Black Diamond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Passage Bio and Black Diamond.
Diversification Opportunities for Passage Bio and Black Diamond
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Passage and Black is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and Black Diamond Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Diamond Therap 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 Black Diamond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Diamond Therap has no effect on the direction of Passage Bio i.e., Passage Bio and Black Diamond go up and down completely randomly.
Pair Corralation between Passage Bio and Black Diamond
Given the investment horizon of 90 days Passage Bio is expected to generate 1.55 times more return on investment than Black Diamond. However, Passage Bio is 1.55 times more volatile than Black Diamond Therapeutics. It trades about -0.01 of its potential returns per unit of risk. Black Diamond Therapeutics is currently generating about -0.22 per unit of risk. If you would invest 58.00 in Passage Bio on August 24, 2024 and sell it today you would lose (4.00) from holding Passage Bio or give up 6.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Passage Bio vs. Black Diamond Therapeutics
Performance |
| Timeline |
| Passage Bio |
| Black Diamond Therap |
Passage Bio and Black Diamond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Passage Bio and Black Diamond
The main advantage of trading using opposite Passage Bio and Black Diamond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Passage Bio position performs unexpectedly, Black Diamond 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 Black Diamond will offset losses from the drop in Black Diamond's long position.| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
| Black Diamond vs. Lyra Therapeutics | Black Diamond vs. Hookipa Pharma | Black Diamond vs. Cingulate Warrants | Black Diamond vs. SAB Biotherapeutics |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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