Correlation Between Scholar Rock and Passage Bio
Can any of the company-specific risk be diversified away by investing in both Scholar Rock and Passage Bio 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 Scholar Rock and Passage Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scholar Rock Holding and Passage Bio, you can compare the effects of market volatilities on Scholar Rock and Passage Bio 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 Scholar Rock with a short position of Passage Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scholar Rock and Passage Bio.
Diversification Opportunities for Scholar Rock and Passage Bio
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scholar and Passage is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Scholar Rock Holding and Passage Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Passage Bio and Scholar Rock 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 Scholar Rock Holding are associated (or correlated) with Passage Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Passage Bio has no effect on the direction of Scholar Rock i.e., Scholar Rock and Passage Bio go up and down completely randomly.
Pair Corralation between Scholar Rock and Passage Bio
Given the investment horizon of 90 days Scholar Rock Holding is expected to generate 0.38 times more return on investment than Passage Bio. However, Scholar Rock Holding is 2.61 times less risky than Passage Bio. It trades about 0.16 of its potential returns per unit of risk. Passage Bio is currently generating about 0.06 per unit of risk. If you would invest 2,991 in Scholar Rock Holding on October 25, 2024 and sell it today you would earn a total of 1,516 from holding Scholar Rock Holding or generate 50.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scholar Rock Holding vs. Passage Bio
Performance |
| Timeline |
| Scholar Rock Holding |
| Passage Bio |
Scholar Rock and Passage Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scholar Rock and Passage Bio
The main advantage of trading using opposite Scholar Rock and Passage Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scholar Rock position performs unexpectedly, Passage Bio 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 Passage Bio will offset losses from the drop in Passage Bio's long position.| Scholar Rock vs. Revolution Medicines | Scholar Rock vs. Black Diamond Therapeutics | Scholar Rock vs. Passage Bio | Scholar Rock vs. Monte Rosa Therapeutics |
| Passage Bio vs. Black Diamond Therapeutics | Passage Bio vs. Revolution Medicines | Passage Bio vs. Stoke Therapeutics | Passage Bio vs. Cabaletta Bio |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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