Correlation Between Sensei Biotherapeutics and NextCure
Can any of the company-specific risk be diversified away by investing in both Sensei Biotherapeutics and NextCure 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 Sensei Biotherapeutics and NextCure into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sensei Biotherapeutics and NextCure, you can compare the effects of market volatilities on Sensei Biotherapeutics and NextCure 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 Sensei Biotherapeutics with a short position of NextCure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sensei Biotherapeutics and NextCure.
Diversification Opportunities for Sensei Biotherapeutics and NextCure
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Sensei and NextCure is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Sensei Biotherapeutics and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure and Sensei Biotherapeutics 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 Sensei Biotherapeutics are associated (or correlated) with NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Sensei Biotherapeutics i.e., Sensei Biotherapeutics and NextCure go up and down completely randomly.
Pair Corralation between Sensei Biotherapeutics and NextCure
Given the investment horizon of 90 days Sensei Biotherapeutics is expected to generate 1.04 times more return on investment than NextCure. However, Sensei Biotherapeutics is 1.04 times more volatile than NextCure. It trades about -0.18 of its potential returns per unit of risk. NextCure is currently generating about -0.22 per unit of risk. If you would invest 53.00 in Sensei Biotherapeutics on November 5, 2024 and sell it today you would lose (6.00) from holding Sensei Biotherapeutics or give up 11.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sensei Biotherapeutics vs. NextCure
Performance |
| Timeline |
| Sensei Biotherapeutics |
| NextCure |
Sensei Biotherapeutics and NextCure Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sensei Biotherapeutics and NextCure
The main advantage of trading using opposite Sensei Biotherapeutics and NextCure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sensei Biotherapeutics position performs unexpectedly, NextCure 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 NextCure will offset losses from the drop in NextCure's long position.The idea behind Sensei Biotherapeutics and NextCure 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.| NextCure vs. CytomX Therapeutics | NextCure vs. Spero Therapeutics | NextCure vs. Instil Bio | NextCure vs. Assembly 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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