Correlation Between Spero Therapeutics and Armata Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Spero Therapeutics and Armata Pharmaceuticals 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 Spero Therapeutics and Armata Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spero Therapeutics and Armata Pharmaceuticals, you can compare the effects of market volatilities on Spero Therapeutics and Armata Pharmaceuticals 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 Spero Therapeutics with a short position of Armata Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spero Therapeutics and Armata Pharmaceuticals.
Diversification Opportunities for Spero Therapeutics and Armata Pharmaceuticals
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Spero and Armata is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Spero Therapeutics and Armata Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Armata Pharmaceuticals and Spero Therapeutics 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 Spero Therapeutics are associated (or correlated) with Armata Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Armata Pharmaceuticals has no effect on the direction of Spero Therapeutics i.e., Spero Therapeutics and Armata Pharmaceuticals go up and down completely randomly.
Pair Corralation between Spero Therapeutics and Armata Pharmaceuticals
Given the investment horizon of 90 days Spero Therapeutics is expected to under-perform the Armata Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Spero Therapeutics is 1.94 times less risky than Armata Pharmaceuticals. The stock trades about -0.02 of its potential returns per unit of risk. The Armata Pharmaceuticals is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 234.00 in Armata Pharmaceuticals on September 14, 2024 and sell it today you would lose (24.00) from holding Armata Pharmaceuticals or give up 10.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spero Therapeutics vs. Armata Pharmaceuticals
Performance |
| Timeline |
| Spero Therapeutics |
| Armata Pharmaceuticals |
Spero Therapeutics and Armata Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spero Therapeutics and Armata Pharmaceuticals
The main advantage of trading using opposite Spero Therapeutics and Armata Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spero Therapeutics position performs unexpectedly, Armata Pharmaceuticals 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 Armata Pharmaceuticals will offset losses from the drop in Armata Pharmaceuticals' long position.| Spero Therapeutics vs. Assembly Biosciences | Spero Therapeutics vs. Achilles Therapeutics PLC | Spero Therapeutics vs. Instil Bio | Spero Therapeutics vs. CytomX 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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