Correlation Between Bolt Biotherapeutics and Arcus Biosciences

Can any of the company-specific risk be diversified away by investing in both Bolt Biotherapeutics and Arcus Biosciences 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 Bolt Biotherapeutics and Arcus Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bolt Biotherapeutics and Arcus Biosciences, you can compare the effects of market volatilities on Bolt Biotherapeutics and Arcus Biosciences 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 Bolt Biotherapeutics with a short position of Arcus Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bolt Biotherapeutics and Arcus Biosciences.

Diversification Opportunities for Bolt Biotherapeutics and Arcus Biosciences

0.27

Correlation Coefficient

Bolt Biotherapeutics  Arcus Biosciences

Modest diversification

The 3 months correlation between Bolt and Arcus is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Bolt Biotherapeutics and Arcus Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcus Biosciences and Bolt Biotherapeutics 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 Bolt Biotherapeutics are associated (or correlated) with Arcus Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arcus Biosciences has no effect on the direction of Bolt Biotherapeutics i.e., Bolt Biotherapeutics and Arcus Biosciences go up and down completely randomly.

Pair Corralation between Bolt Biotherapeutics and Arcus Biosciences

Given the investment horizon of 90 days Bolt Biotherapeutics is expected to under-perform the Arcus Biosciences. In addition to that, Bolt Biotherapeutics is 1.01 times more volatile than Arcus Biosciences. It trades about -0.03 of its total potential returns per unit of risk. Arcus Biosciences is currently generating about 0.01 per unit of volatility. If you would invest  2,041  in Arcus Biosciences on September 13, 2024 and sell it today you would lose (299.00) from holding Arcus Biosciences or give up 14.65% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Bolt Biotherapeutics  vs.  Arcus Biosciences

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Arcus Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Arcus Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Arcus Biosciences is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bolt Biotherapeutics and Arcus Biosciences

The main advantage of trading using opposite Bolt Biotherapeutics and Arcus Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bolt Biotherapeutics position performs unexpectedly, Arcus Biosciences 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 Arcus Biosciences will offset losses from the drop in Arcus Biosciences' long position.

The idea behind Bolt Biotherapeutics and Arcus Biosciences 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.