Correlation Between Passage Bio and Avidity Biosciences
Can any of the company-specific risk be diversified away by investing in both Passage Bio and Avidity Biosciences 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 Avidity Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Passage Bio and Avidity Biosciences, you can compare the effects of market volatilities on Passage Bio and Avidity Biosciences 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 Avidity Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Passage Bio and Avidity Biosciences.
Diversification Opportunities for Passage Bio and Avidity Biosciences
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Passage and Avidity is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and Avidity Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avidity Biosciences 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 Avidity Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avidity Biosciences has no effect on the direction of Passage Bio i.e., Passage Bio and Avidity Biosciences go up and down completely randomly.
Pair Corralation between Passage Bio and Avidity Biosciences
Given the investment horizon of 90 days Passage Bio is expected to generate 4.53 times less return on investment than Avidity Biosciences. In addition to that, Passage Bio is 1.42 times more volatile than Avidity Biosciences. It trades about 0.01 of its total potential returns per unit of risk. Avidity Biosciences is currently generating about 0.04 per unit of volatility. If you would invest 2,319 in Avidity Biosciences on November 9, 2024 and sell it today you would earn a total of 1,192 from holding Avidity Biosciences or generate 51.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Passage Bio vs. Avidity Biosciences
Performance |
| Timeline |
| Passage Bio |
| Avidity Biosciences |
Passage Bio and Avidity Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Passage Bio and Avidity Biosciences
The main advantage of trading using opposite Passage Bio and Avidity Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Passage Bio position performs unexpectedly, Avidity Biosciences 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 Avidity Biosciences will offset losses from the drop in Avidity Biosciences' long position.| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
| Avidity Biosciences vs. Revolution Medicines | Avidity Biosciences vs. Black Diamond Therapeutics | Avidity Biosciences vs. Passage Bio | Avidity Biosciences vs. Akero 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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