Correlation Between SpringWorks Therapeutics and MeiraGTx Holdings
Can any of the company-specific risk be diversified away by investing in both SpringWorks Therapeutics and MeiraGTx Holdings 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 MeiraGTx Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SpringWorks Therapeutics and MeiraGTx Holdings PLC, you can compare the effects of market volatilities on SpringWorks Therapeutics and MeiraGTx Holdings 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 MeiraGTx Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of SpringWorks Therapeutics and MeiraGTx Holdings.
Diversification Opportunities for SpringWorks Therapeutics and MeiraGTx Holdings
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between SpringWorks and MeiraGTx is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding SpringWorks Therapeutics and MeiraGTx Holdings PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MeiraGTx Holdings PLC 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 MeiraGTx Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MeiraGTx Holdings PLC has no effect on the direction of SpringWorks Therapeutics i.e., SpringWorks Therapeutics and MeiraGTx Holdings go up and down completely randomly.
Pair Corralation between SpringWorks Therapeutics and MeiraGTx Holdings
Given the investment horizon of 90 days SpringWorks Therapeutics is expected to generate 2.58 times more return on investment than MeiraGTx Holdings. However, SpringWorks Therapeutics is 2.58 times more volatile than MeiraGTx Holdings PLC. It trades about 0.31 of its potential returns per unit of risk. MeiraGTx Holdings PLC is currently generating about 0.25 per unit of risk. If you would invest 3,582 in SpringWorks Therapeutics on November 27, 2024 and sell it today you would earn a total of 2,074 from holding SpringWorks Therapeutics or generate 57.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SpringWorks Therapeutics vs. MeiraGTx Holdings PLC
Performance |
| Timeline |
| SpringWorks Therapeutics |
| MeiraGTx Holdings PLC |
SpringWorks Therapeutics and MeiraGTx Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SpringWorks Therapeutics and MeiraGTx Holdings
The main advantage of trading using opposite SpringWorks Therapeutics and MeiraGTx Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SpringWorks Therapeutics position performs unexpectedly, MeiraGTx Holdings 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 MeiraGTx Holdings will offset losses from the drop in MeiraGTx Holdings' long position.| SpringWorks Therapeutics vs. Relay Therapeutics | SpringWorks Therapeutics vs. Stoke Therapeutics | SpringWorks Therapeutics vs. Pliant Therapeutics | SpringWorks Therapeutics vs. Black Diamond Therapeutics |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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