Correlation Between Arcus Biosciences and Fate Therapeutics
Can any of the company-specific risk be diversified away by investing in both Arcus Biosciences and Fate Therapeutics 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 Arcus Biosciences and Fate Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arcus Biosciences and Fate Therapeutics, you can compare the effects of market volatilities on Arcus Biosciences and Fate Therapeutics 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 Arcus Biosciences with a short position of Fate Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcus Biosciences and Fate Therapeutics.
Diversification Opportunities for Arcus Biosciences and Fate Therapeutics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arcus and Fate is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Arcus Biosciences and Fate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fate Therapeutics and Arcus Biosciences 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 Arcus Biosciences are associated (or correlated) with Fate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fate Therapeutics has no effect on the direction of Arcus Biosciences i.e., Arcus Biosciences and Fate Therapeutics go up and down completely randomly.
Pair Corralation between Arcus Biosciences and Fate Therapeutics
Given the investment horizon of 90 days Arcus Biosciences is expected to under-perform the Fate Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Arcus Biosciences is 1.9 times less risky than Fate Therapeutics. The stock trades about -0.16 of its potential returns per unit of risk. The Fate Therapeutics is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 287.00 in Fate Therapeutics on August 28, 2024 and sell it today you would lose (45.00) from holding Fate Therapeutics or give up 15.68% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Arcus Biosciences vs. Fate Therapeutics
Performance |
| Timeline |
| Arcus Biosciences |
| Fate Therapeutics |
Arcus Biosciences and Fate Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arcus Biosciences and Fate Therapeutics
The main advantage of trading using opposite Arcus Biosciences and Fate Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcus Biosciences position performs unexpectedly, Fate Therapeutics 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 Fate Therapeutics will offset losses from the drop in Fate Therapeutics' long position.| Arcus Biosciences vs. Cullinan Oncology LLC | Arcus Biosciences vs. Annexon | Arcus Biosciences vs. Structure Therapeutics American | Arcus Biosciences vs. Relay Therapeutics |
| Fate Therapeutics vs. Atara Biotherapeutics | Fate Therapeutics vs. Sana Biotechnology | Fate Therapeutics vs. Caribou Biosciences | Fate Therapeutics vs. Arcus Biosciences |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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