Correlation Between Caribou Biosciences and Vericel Corp

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

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

Diversification Opportunities for Caribou Biosciences and Vericel Corp

0.29

Correlation Coefficient

Caribou Biosciences  Vericel Corp

Modest diversification

The 3 months correlation between Caribou and Vericel is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Vericel Corp Ord in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vericel Corp Ord 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 Vericel Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vericel Corp Ord has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Vericel Corp go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Vericel Corp

Given the investment horizon of 90 days Caribou Biosciences is expected to generate 10.28 times less return on investment than Vericel Corp. In addition to that, Caribou Biosciences is 1.81 times more volatile than Vericel Corp Ord. It trades about 0.01 of its total potential returns per unit of risk. Vericel Corp Ord is currently generating about 0.13 per unit of volatility. If you would invest  4,637  in Vericel Corp Ord on September 23, 2024 and sell it today you would earn a total of  1,013  from holding Vericel Corp Ord or generate 21.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Caribou Biosciences  vs.  Vericel Corp Ord

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vericel Corp Ord

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady technical and fundamental indicators, Vericel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caribou Biosciences and Vericel Corp

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

The idea behind Caribou Biosciences and Vericel Corp Ord 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.