Correlation Between Passage Bio and 4D Molecular
Can any of the company-specific risk be diversified away by investing in both Passage Bio and 4D Molecular 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 4D Molecular into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Passage Bio and 4D Molecular Therapeutics, you can compare the effects of market volatilities on Passage Bio and 4D Molecular 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 4D Molecular. Check out your portfolio center. Please also check ongoing floating volatility patterns of Passage Bio and 4D Molecular.
Diversification Opportunities for Passage Bio and 4D Molecular
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Passage and FDMT is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and 4D Molecular Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 4D Molecular 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 4D Molecular. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 4D Molecular Therapeutics has no effect on the direction of Passage Bio i.e., Passage Bio and 4D Molecular go up and down completely randomly.
Pair Corralation between Passage Bio and 4D Molecular
Given the investment horizon of 90 days Passage Bio is expected to generate 0.77 times more return on investment than 4D Molecular. However, Passage Bio is 1.29 times less risky than 4D Molecular. It trades about -0.01 of its potential returns per unit of risk. 4D Molecular Therapeutics is currently generating about -0.02 per unit of risk. If you would invest 98.00 in Passage Bio on August 28, 2024 and sell it today you would lose (36.00) from holding Passage Bio or give up 36.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Passage Bio vs. 4D Molecular Therapeutics
Performance |
| Timeline |
| Passage Bio |
| 4D Molecular Therapeutics |
Passage Bio and 4D Molecular Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Passage Bio and 4D Molecular
The main advantage of trading using opposite Passage Bio and 4D Molecular positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Passage Bio position performs unexpectedly, 4D Molecular 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 4D Molecular will offset losses from the drop in 4D Molecular's long position.| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
| 4D Molecular vs. Revolution Medicines | 4D Molecular vs. Black Diamond Therapeutics | 4D Molecular vs. Passage Bio | 4D Molecular 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.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |