Correlation Between Stoke Therapeutics and Madrigal Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Stoke Therapeutics and Madrigal 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 Stoke Therapeutics and Madrigal Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoke Therapeutics and Madrigal Pharmaceuticals, you can compare the effects of market volatilities on Stoke Therapeutics and Madrigal 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 Stoke Therapeutics with a short position of Madrigal Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoke Therapeutics and Madrigal Pharmaceuticals.
Diversification Opportunities for Stoke Therapeutics and Madrigal Pharmaceuticals
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Stoke and Madrigal is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and Madrigal Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madrigal Pharmaceuticals 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 Madrigal Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madrigal Pharmaceuticals has no effect on the direction of Stoke Therapeutics i.e., Stoke Therapeutics and Madrigal Pharmaceuticals go up and down completely randomly.
Pair Corralation between Stoke Therapeutics and Madrigal Pharmaceuticals
Given the investment horizon of 90 days Stoke Therapeutics is expected to under-perform the Madrigal Pharmaceuticals. In addition to that, Stoke Therapeutics is 1.15 times more volatile than Madrigal Pharmaceuticals. It trades about -0.23 of its total potential returns per unit of risk. Madrigal Pharmaceuticals is currently generating about -0.05 per unit of volatility. If you would invest 30,844 in Madrigal Pharmaceuticals on October 21, 2024 and sell it today you would lose (1,480) from holding Madrigal Pharmaceuticals or give up 4.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stoke Therapeutics vs. Madrigal Pharmaceuticals
Performance |
| Timeline |
| Stoke Therapeutics |
| Madrigal Pharmaceuticals |
Stoke Therapeutics and Madrigal Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stoke Therapeutics and Madrigal Pharmaceuticals
The main advantage of trading using opposite Stoke Therapeutics and Madrigal Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoke Therapeutics position performs unexpectedly, Madrigal 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 Madrigal Pharmaceuticals will offset losses from the drop in Madrigal Pharmaceuticals' long position.| Stoke Therapeutics vs. Adaptimmune Therapeutics Plc | Stoke Therapeutics vs. Black Diamond Therapeutics | Stoke Therapeutics vs. Relay Therapeutics | Stoke Therapeutics vs. Pliant Therapeutics |
| Madrigal Pharmaceuticals vs. TG Therapeutics | Madrigal Pharmaceuticals vs. Terns Pharmaceuticals | Madrigal Pharmaceuticals vs. Hepion Pharmaceuticals | Madrigal Pharmaceuticals vs. Viking 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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