Correlation Between Rezolute and Aura Biosciences
Can any of the company-specific risk be diversified away by investing in both Rezolute and Aura 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 Rezolute and Aura Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rezolute and Aura Biosciences, you can compare the effects of market volatilities on Rezolute and Aura 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 Rezolute with a short position of Aura Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rezolute and Aura Biosciences.
Diversification Opportunities for Rezolute and Aura Biosciences
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Rezolute and Aura is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Rezolute and Aura Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aura Biosciences and Rezolute 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 Rezolute are associated (or correlated) with Aura Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aura Biosciences has no effect on the direction of Rezolute i.e., Rezolute and Aura Biosciences go up and down completely randomly.
Pair Corralation between Rezolute and Aura Biosciences
Given the investment horizon of 90 days Rezolute is expected to generate 1.51 times more return on investment than Aura Biosciences. However, Rezolute is 1.51 times more volatile than Aura Biosciences. It trades about -0.02 of its potential returns per unit of risk. Aura Biosciences is currently generating about -0.18 per unit of risk. If you would invest 558.00 in Rezolute on November 8, 2024 and sell it today you would lose (48.00) from holding Rezolute or give up 8.6% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rezolute vs. Aura Biosciences
Performance |
| Timeline |
| Rezolute |
| Aura Biosciences |
Rezolute and Aura Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rezolute and Aura Biosciences
The main advantage of trading using opposite Rezolute and Aura Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rezolute position performs unexpectedly, Aura 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 Aura Biosciences will offset losses from the drop in Aura Biosciences' long position.The idea behind Rezolute and Aura Biosciences pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aura Biosciences vs. Aerovate Therapeutics | Aura Biosciences vs. Adagene | Aura Biosciences vs. Acrivon Therapeutics, Common | Aura Biosciences vs. Rezolute |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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