Correlation Between Passage Bio and Scholar Rock
Can any of the company-specific risk be diversified away by investing in both Passage Bio and Scholar Rock 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 Scholar Rock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Passage Bio and Scholar Rock Holding, you can compare the effects of market volatilities on Passage Bio and Scholar Rock 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 Scholar Rock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Passage Bio and Scholar Rock.
Diversification Opportunities for Passage Bio and Scholar Rock
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Passage and Scholar is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and Scholar Rock Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scholar Rock Holding 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 Scholar Rock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scholar Rock Holding has no effect on the direction of Passage Bio i.e., Passage Bio and Scholar Rock go up and down completely randomly.
Pair Corralation between Passage Bio and Scholar Rock
Given the investment horizon of 90 days Passage Bio is expected to generate 1.11 times less return on investment than Scholar Rock. In addition to that, Passage Bio is 2.61 times more volatile than Scholar Rock Holding. It trades about 0.06 of its total potential returns per unit of risk. Scholar Rock Holding is currently generating about 0.16 per unit of volatility. If you would invest 2,991 in Scholar Rock Holding on October 25, 2024 and sell it today you would earn a total of 1,516 from holding Scholar Rock Holding or generate 50.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Passage Bio vs. Scholar Rock Holding
Performance |
| Timeline |
| Passage Bio |
| Scholar Rock Holding |
Passage Bio and Scholar Rock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Passage Bio and Scholar Rock
The main advantage of trading using opposite Passage Bio and Scholar Rock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Passage Bio position performs unexpectedly, Scholar Rock 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 Scholar Rock will offset losses from the drop in Scholar Rock's long position.| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
| Scholar Rock vs. Revolution Medicines | Scholar Rock vs. Black Diamond Therapeutics | Scholar Rock vs. Passage Bio | Scholar Rock 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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