Correlation Between Verastem and EnGene Holdings
Can any of the company-specific risk be diversified away by investing in both Verastem and EnGene 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 Verastem and EnGene Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Verastem and enGene Holdings Common, you can compare the effects of market volatilities on Verastem and EnGene 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 Verastem with a short position of EnGene Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Verastem and EnGene Holdings.
Diversification Opportunities for Verastem and EnGene Holdings
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Verastem and EnGene is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Verastem and enGene Holdings Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enGene Holdings Common and Verastem 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 Verastem are associated (or correlated) with EnGene Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enGene Holdings Common has no effect on the direction of Verastem i.e., Verastem and EnGene Holdings go up and down completely randomly.
Pair Corralation between Verastem and EnGene Holdings
Given the investment horizon of 90 days Verastem is expected to generate 4.96 times less return on investment than EnGene Holdings. But when comparing it to its historical volatility, Verastem is 1.54 times less risky than EnGene Holdings. It trades about 0.01 of its potential returns per unit of risk. enGene Holdings Common is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 766.00 in enGene Holdings Common on August 26, 2024 and sell it today you would earn a total of 2.00 from holding enGene Holdings Common or generate 0.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Verastem vs. enGene Holdings Common
Performance |
| Timeline |
| Verastem |
| enGene Holdings Common |
Verastem and EnGene Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Verastem and EnGene Holdings
The main advantage of trading using opposite Verastem and EnGene Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Verastem position performs unexpectedly, EnGene 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 EnGene Holdings will offset losses from the drop in EnGene Holdings' long position.The idea behind Verastem and enGene Holdings Common pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| EnGene Holdings vs. Beam Therapeutics | EnGene Holdings vs. Caribou Biosciences | EnGene Holdings vs. Intellia Therapeutics | EnGene Holdings vs. Sana Biotechnology |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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