Correlation Between Tandem Diabetes and Aquestive Therapeutics
Can any of the company-specific risk be diversified away by investing in both Tandem Diabetes and Aquestive Therapeutics 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 Tandem Diabetes and Aquestive Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tandem Diabetes Care and Aquestive Therapeutics, you can compare the effects of market volatilities on Tandem Diabetes and Aquestive Therapeutics 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 Tandem Diabetes with a short position of Aquestive Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tandem Diabetes and Aquestive Therapeutics.
Diversification Opportunities for Tandem Diabetes and Aquestive Therapeutics
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tandem and Aquestive is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Tandem Diabetes Care and Aquestive Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquestive Therapeutics and Tandem Diabetes 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 Tandem Diabetes Care are associated (or correlated) with Aquestive Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquestive Therapeutics has no effect on the direction of Tandem Diabetes i.e., Tandem Diabetes and Aquestive Therapeutics go up and down completely randomly.
Pair Corralation between Tandem Diabetes and Aquestive Therapeutics
Given the investment horizon of 90 days Tandem Diabetes Care is expected to generate 0.83 times more return on investment than Aquestive Therapeutics. However, Tandem Diabetes Care is 1.21 times less risky than Aquestive Therapeutics. It trades about -0.08 of its potential returns per unit of risk. Aquestive Therapeutics is currently generating about -0.12 per unit of risk. If you would invest 3,275 in Tandem Diabetes Care on August 28, 2024 and sell it today you would lose (233.00) from holding Tandem Diabetes Care or give up 7.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tandem Diabetes Care vs. Aquestive Therapeutics
Performance |
| Timeline |
| Tandem Diabetes Care |
| Aquestive Therapeutics |
Tandem Diabetes and Aquestive Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tandem Diabetes and Aquestive Therapeutics
The main advantage of trading using opposite Tandem Diabetes and Aquestive Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tandem Diabetes position performs unexpectedly, Aquestive Therapeutics 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 Aquestive Therapeutics will offset losses from the drop in Aquestive Therapeutics' long position.| Tandem Diabetes vs. DexCom Inc | Tandem Diabetes vs. Inspire Medical Systems | Tandem Diabetes vs. Penumbra | Tandem Diabetes vs. Insulet |
| Aquestive Therapeutics vs. Capricor Therapeutics | Aquestive Therapeutics vs. Soleno Therapeutics | Aquestive Therapeutics vs. Bio Path Holdings | Aquestive Therapeutics vs. Moleculin Biotech |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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