Correlation Between Sarepta Therapeutics and Fortress Biotech
Can any of the company-specific risk be diversified away by investing in both Sarepta Therapeutics and Fortress Biotech 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 Sarepta Therapeutics and Fortress Biotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sarepta Therapeutics and Fortress Biotech, you can compare the effects of market volatilities on Sarepta Therapeutics and Fortress Biotech 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 Sarepta Therapeutics with a short position of Fortress Biotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sarepta Therapeutics and Fortress Biotech.
Diversification Opportunities for Sarepta Therapeutics and Fortress Biotech
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sarepta and Fortress is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Sarepta Therapeutics and Fortress Biotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech and Sarepta 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 Sarepta Therapeutics are associated (or correlated) with Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech has no effect on the direction of Sarepta Therapeutics i.e., Sarepta Therapeutics and Fortress Biotech go up and down completely randomly.
Pair Corralation between Sarepta Therapeutics and Fortress Biotech
Given the investment horizon of 90 days Sarepta Therapeutics is expected to generate 0.62 times more return on investment than Fortress Biotech. However, Sarepta Therapeutics is 1.61 times less risky than Fortress Biotech. It trades about -0.23 of its potential returns per unit of risk. Fortress Biotech is currently generating about -0.2 per unit of risk. If you would invest 13,026 in Sarepta Therapeutics on August 28, 2024 and sell it today you would lose (1,561) from holding Sarepta Therapeutics or give up 11.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sarepta Therapeutics vs. Fortress Biotech
Performance |
| Timeline |
| Sarepta Therapeutics |
| Fortress Biotech |
Sarepta Therapeutics and Fortress Biotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sarepta Therapeutics and Fortress Biotech
The main advantage of trading using opposite Sarepta Therapeutics and Fortress Biotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sarepta Therapeutics position performs unexpectedly, Fortress Biotech 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 Fortress Biotech will offset losses from the drop in Fortress Biotech's long position.| Sarepta Therapeutics vs. Krystal Biotech | Sarepta Therapeutics vs. PTC Therapeutics | Sarepta Therapeutics vs. Iovance Biotherapeutics | Sarepta Therapeutics vs. Madrigal Pharmaceuticals |
| Fortress Biotech vs. Mustang Bio | Fortress Biotech vs. Achilles Therapeutics PLC | Fortress Biotech vs. Aptose Biosciences | Fortress Biotech vs. Fortress Biotech Pref |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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