Correlation Between Passage Bio and Revolution Medicines
Can any of the company-specific risk be diversified away by investing in both Passage Bio and Revolution Medicines 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 Revolution Medicines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Passage Bio and Revolution Medicines, you can compare the effects of market volatilities on Passage Bio and Revolution Medicines 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 Revolution Medicines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Passage Bio and Revolution Medicines.
Diversification Opportunities for Passage Bio and Revolution Medicines
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Passage and Revolution is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and Revolution Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Medicines 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 Revolution Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Medicines has no effect on the direction of Passage Bio i.e., Passage Bio and Revolution Medicines go up and down completely randomly.
Pair Corralation between Passage Bio and Revolution Medicines
Given the investment horizon of 90 days Passage Bio is expected to generate 3.82 times more return on investment than Revolution Medicines. However, Passage Bio is 3.82 times more volatile than Revolution Medicines. It trades about 0.03 of its potential returns per unit of risk. Revolution Medicines is currently generating about 0.03 per unit of risk. If you would invest 66.00 in Passage Bio on November 2, 2024 and sell it today you would lose (8.00) from holding Passage Bio or give up 12.12% 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. Revolution Medicines
Performance |
| Timeline |
| Passage Bio |
| Revolution Medicines |
Passage Bio and Revolution Medicines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Passage Bio and Revolution Medicines
The main advantage of trading using opposite Passage Bio and Revolution Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Passage Bio position performs unexpectedly, Revolution Medicines 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 Revolution Medicines will offset losses from the drop in Revolution Medicines' long position.| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
| Revolution Medicines vs. Blueprint Medicines Corp | Revolution Medicines vs. Sana Biotechnology | Revolution Medicines vs. Kymera Therapeutics | Revolution Medicines vs. Monte Rosa 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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