Correlation Between CEL SCI and Fate Therapeutics

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

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

Diversification Opportunities for CEL SCI and Fate Therapeutics

0.7

Correlation Coefficient

CEL SCI  Fate Therapeutics

Poor diversification

The 3 months correlation between CEL and Fate is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding CEL SCI Corp and Fate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fate Therapeutics and CEL SCI 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 CEL SCI Corp are associated (or correlated) with Fate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fate Therapeutics has no effect on the direction of CEL SCI i.e., CEL SCI and Fate Therapeutics go up and down completely randomly.

Pair Corralation between CEL SCI and Fate Therapeutics

Considering the 90-day investment horizon CEL SCI Corp is expected to generate 1.77 times more return on investment than Fate Therapeutics. However, CEL SCI is 1.77 times more volatile than Fate Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Fate Therapeutics is currently generating about -0.47 per unit of risk. If you would invest  66.00  in CEL SCI Corp on September 29, 2024 and sell it today you would lose (6.00) from holding CEL SCI Corp or give up 9.09% of portfolio value over 90 days.

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

CEL SCI Corp  vs.  Fate Therapeutics

CEL SCI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEL SCI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Fate Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fate Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CEL SCI and Fate Therapeutics

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

The idea behind CEL SCI Corp and Fate Therapeutics 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.