Correlation Between SpringWorks Therapeutics and Equillium
Can any of the company-specific risk be diversified away by investing in both SpringWorks Therapeutics and Equillium 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 SpringWorks Therapeutics and Equillium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SpringWorks Therapeutics and Equillium, you can compare the effects of market volatilities on SpringWorks Therapeutics and Equillium 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 SpringWorks Therapeutics with a short position of Equillium. Check out your portfolio center. Please also check ongoing floating volatility patterns of SpringWorks Therapeutics and Equillium.
Diversification Opportunities for SpringWorks Therapeutics and Equillium
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SpringWorks and Equillium is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding SpringWorks Therapeutics and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and SpringWorks 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 SpringWorks Therapeutics are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of SpringWorks Therapeutics i.e., SpringWorks Therapeutics and Equillium go up and down completely randomly.
Pair Corralation between SpringWorks Therapeutics and Equillium
Given the investment horizon of 90 days SpringWorks Therapeutics is expected to generate 0.62 times more return on investment than Equillium. However, SpringWorks Therapeutics is 1.62 times less risky than Equillium. It trades about 0.3 of its potential returns per unit of risk. Equillium is currently generating about -0.03 per unit of risk. If you would invest 3,352 in SpringWorks Therapeutics on September 12, 2024 and sell it today you would earn a total of 811.00 from holding SpringWorks Therapeutics or generate 24.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SpringWorks Therapeutics vs. Equillium
Performance |
| Timeline |
| SpringWorks Therapeutics |
| Equillium |
SpringWorks Therapeutics and Equillium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SpringWorks Therapeutics and Equillium
The main advantage of trading using opposite SpringWorks Therapeutics and Equillium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SpringWorks Therapeutics position performs unexpectedly, Equillium 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 Equillium will offset losses from the drop in Equillium's long position.| SpringWorks Therapeutics vs. Equillium | SpringWorks Therapeutics vs. DiaMedica Therapeutics | SpringWorks Therapeutics vs. Valneva SE ADR | SpringWorks Therapeutics vs. Vivani Medical |
| Equillium vs. Lyra Therapeutics | Equillium vs. Hookipa Pharma | Equillium vs. Jasper Therapeutics | Equillium vs. Cingulate Warrants |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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