Correlation Between Stoke Therapeutics and Caribou Biosciences
Can any of the company-specific risk be diversified away by investing in both Stoke Therapeutics and Caribou Biosciences 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 Stoke Therapeutics and Caribou Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoke Therapeutics and Caribou Biosciences, you can compare the effects of market volatilities on Stoke Therapeutics and Caribou Biosciences 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 Stoke Therapeutics with a short position of Caribou Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoke Therapeutics and Caribou Biosciences.
Diversification Opportunities for Stoke Therapeutics and Caribou Biosciences
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Stoke and Caribou is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and Caribou Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribou Biosciences and Stoke 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 Stoke Therapeutics are associated (or correlated) with Caribou Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribou Biosciences has no effect on the direction of Stoke Therapeutics i.e., Stoke Therapeutics and Caribou Biosciences go up and down completely randomly.
Pair Corralation between Stoke Therapeutics and Caribou Biosciences
Given the investment horizon of 90 days Stoke Therapeutics is expected to under-perform the Caribou Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Stoke Therapeutics is 1.6 times less risky than Caribou Biosciences. The stock trades about -0.06 of its potential returns per unit of risk. The Caribou Biosciences is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 221.00 in Caribou Biosciences on September 2, 2024 and sell it today you would lose (2.00) from holding Caribou Biosciences or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stoke Therapeutics vs. Caribou Biosciences
Performance |
| Timeline |
| Stoke Therapeutics |
| Caribou Biosciences |
Stoke Therapeutics and Caribou Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stoke Therapeutics and Caribou Biosciences
The main advantage of trading using opposite Stoke Therapeutics and Caribou Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoke Therapeutics position performs unexpectedly, Caribou Biosciences 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 Caribou Biosciences will offset losses from the drop in Caribou Biosciences' long position.| Stoke Therapeutics vs. Tff Pharmaceuticals | Stoke Therapeutics vs. Eliem Therapeutics | Stoke Therapeutics vs. Inhibrx | Stoke Therapeutics vs. Enliven Therapeutics |
| Caribou Biosciences vs. Intellia Therapeutics | Caribou Biosciences vs. Editas Medicine | Caribou Biosciences vs. Crispr Therapeutics AG | Caribou Biosciences vs. Verve 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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