Correlation Between Avidity Biosciences and Homology Medicines
Can any of the company-specific risk be diversified away by investing in both Avidity Biosciences and Homology 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 Avidity Biosciences and Homology Medicines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avidity Biosciences and Homology Medicines, you can compare the effects of market volatilities on Avidity Biosciences and Homology 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 Avidity Biosciences with a short position of Homology Medicines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avidity Biosciences and Homology Medicines.
Diversification Opportunities for Avidity Biosciences and Homology Medicines
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Avidity and Homology is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Avidity Biosciences and Homology Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homology Medicines and Avidity 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 Avidity Biosciences are associated (or correlated) with Homology Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homology Medicines has no effect on the direction of Avidity Biosciences i.e., Avidity Biosciences and Homology Medicines go up and down completely randomly.
Pair Corralation between Avidity Biosciences and Homology Medicines
Considering the 90-day investment horizon Avidity Biosciences is expected to generate 2.97 times less return on investment than Homology Medicines. In addition to that, Avidity Biosciences is 1.22 times more volatile than Homology Medicines. It trades about 0.11 of its total potential returns per unit of risk. Homology Medicines is currently generating about 0.39 per unit of volatility. If you would invest 88.00 in Homology Medicines on August 28, 2024 and sell it today you would earn a total of 21.00 from holding Homology Medicines or generate 23.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.24% |
| Values | Daily Returns |
Avidity Biosciences vs. Homology Medicines
Performance |
| Timeline |
| Avidity Biosciences |
| Homology Medicines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Avidity Biosciences and Homology Medicines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avidity Biosciences and Homology Medicines
The main advantage of trading using opposite Avidity Biosciences and Homology Medicines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avidity Biosciences position performs unexpectedly, Homology 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 Homology Medicines will offset losses from the drop in Homology Medicines' long position.| Avidity Biosciences vs. Revolution Medicines | Avidity Biosciences vs. Black Diamond Therapeutics | Avidity Biosciences vs. Passage Bio | Avidity Biosciences vs. Akero Therapeutics |
| Homology Medicines vs. Passage Bio | Homology Medicines vs. Stoke Therapeutics | Homology Medicines vs. Adaptimmune Therapeutics Plc | Homology Medicines vs. Black Diamond 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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