Correlation Between Cassava Sciences and Vir Biotechnology
Can any of the company-specific risk be diversified away by investing in both Cassava Sciences and Vir Biotechnology 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 Cassava Sciences and Vir Biotechnology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cassava Sciences and Vir Biotechnology, you can compare the effects of market volatilities on Cassava Sciences and Vir Biotechnology 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 Cassava Sciences with a short position of Vir Biotechnology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cassava Sciences and Vir Biotechnology.
Diversification Opportunities for Cassava Sciences and Vir Biotechnology
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cassava and Vir is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cassava Sciences and Vir Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vir Biotechnology and Cassava Sciences 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 Cassava Sciences are associated (or correlated) with Vir Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vir Biotechnology has no effect on the direction of Cassava Sciences i.e., Cassava Sciences and Vir Biotechnology go up and down completely randomly.
Pair Corralation between Cassava Sciences and Vir Biotechnology
Given the investment horizon of 90 days Cassava Sciences is expected to generate 1.8 times more return on investment than Vir Biotechnology. However, Cassava Sciences is 1.8 times more volatile than Vir Biotechnology. It trades about -0.01 of its potential returns per unit of risk. Vir Biotechnology is currently generating about -0.04 per unit of risk. If you would invest 3,873 in Cassava Sciences on August 30, 2024 and sell it today you would lose (3,475) from holding Cassava Sciences or give up 89.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cassava Sciences vs. Vir Biotechnology
Performance |
| Timeline |
| Cassava Sciences |
| Vir Biotechnology |
Cassava Sciences and Vir Biotechnology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cassava Sciences and Vir Biotechnology
The main advantage of trading using opposite Cassava Sciences and Vir Biotechnology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cassava Sciences position performs unexpectedly, Vir Biotechnology 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 Vir Biotechnology will offset losses from the drop in Vir Biotechnology's long position.| Cassava Sciences vs. Annovis Bio | Cassava Sciences vs. Axsome Therapeutics | Cassava Sciences vs. Reviva Pharmaceuticals Holdings | Cassava Sciences vs. Seres Therapeutics |
| Vir Biotechnology vs. CureVac NV | Vir Biotechnology vs. Krystal Biotech | Vir Biotechnology vs. Propanc Biopharma | Vir Biotechnology vs. Blueprint Medicines Corp |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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