Correlation Between Stoke Therapeutics and Roivant Sciences
Can any of the company-specific risk be diversified away by investing in both Stoke Therapeutics and Roivant Sciences 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 Roivant Sciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stoke Therapeutics and Roivant Sciences, you can compare the effects of market volatilities on Stoke Therapeutics and Roivant Sciences 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 Roivant Sciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stoke Therapeutics and Roivant Sciences.
Diversification Opportunities for Stoke Therapeutics and Roivant Sciences
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stoke and Roivant is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stoke Therapeutics and Roivant Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roivant Sciences 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 Roivant Sciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roivant Sciences has no effect on the direction of Stoke Therapeutics i.e., Stoke Therapeutics and Roivant Sciences go up and down completely randomly.
Pair Corralation between Stoke Therapeutics and Roivant Sciences
Given the investment horizon of 90 days Stoke Therapeutics is expected to generate 2.21 times more return on investment than Roivant Sciences. However, Stoke Therapeutics is 2.21 times more volatile than Roivant Sciences. It trades about 0.03 of its potential returns per unit of risk. Roivant Sciences is currently generating about 0.04 per unit of risk. If you would invest 1,269 in Stoke Therapeutics on August 31, 2024 and sell it today you would lose (58.00) from holding Stoke Therapeutics or give up 4.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stoke Therapeutics vs. Roivant Sciences
Performance |
| Timeline |
| Stoke Therapeutics |
| Roivant Sciences |
Stoke Therapeutics and Roivant Sciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stoke Therapeutics and Roivant Sciences
The main advantage of trading using opposite Stoke Therapeutics and Roivant Sciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stoke Therapeutics position performs unexpectedly, Roivant Sciences 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 Roivant Sciences will offset losses from the drop in Roivant Sciences' long position.| Stoke Therapeutics vs. Adaptimmune Therapeutics Plc | Stoke Therapeutics vs. Black Diamond Therapeutics | Stoke Therapeutics vs. Relay Therapeutics | Stoke Therapeutics vs. Pliant Therapeutics |
| Roivant Sciences vs. Krystal Biotech | Roivant Sciences vs. Akero Therapeutics | Roivant Sciences vs. Apellis Pharmaceuticals | Roivant Sciences vs. Day One Biopharmaceuticals |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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