Correlation Between Caribou Biosciences and Arcus Biosciences

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

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

Diversification Opportunities for Caribou Biosciences and Arcus Biosciences

0.04

Correlation Coefficient

Caribou Biosciences  Arcus Biosciences

Significant diversification

The 3 months correlation between Caribou and Arcus is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Arcus Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arcus Biosciences and Caribou Biosciences 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 Caribou Biosciences 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 Caribou Biosciences i.e., Caribou Biosciences and Arcus Biosciences go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Arcus Biosciences

Given the investment horizon of 90 days Caribou Biosciences is expected to generate 1.37 times more return on investment than Arcus Biosciences. However, Caribou Biosciences is 1.37 times more volatile than Arcus Biosciences. It trades about 0.1 of its potential returns per unit of risk. Arcus Biosciences is currently generating about 0.01 per unit of risk. If you would invest  190.00  in Caribou Biosciences on September 4, 2024 and sell it today you would earn a total of  47.00  from holding Caribou Biosciences or generate 24.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Caribou Biosciences  vs.  Arcus Biosciences

Caribou Biosciences

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Caribou Biosciences are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Caribou Biosciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 Caribou Biosciences and Arcus Biosciences

The main advantage of trading using opposite Caribou Biosciences and Arcus Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribou Biosciences 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 Caribou Biosciences 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.