Correlation Between Day One and Freeline Therapeutics

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

By analyzing existing cross correlation between Day One Biopharmaceuticals and Freeline Therapeutics Holdings, you can compare the effects of market volatilities on Day One and Freeline 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 Day One with a short position of Freeline Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Day One and Freeline Therapeutics.

Diversification Opportunities for Day One and Freeline Therapeutics

-0.55

Correlation Coefficient

Day One  Freeline Therapeutics

Excellent diversification

The 3 months correlation between Day and Freeline is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Day One Biopharmaceuticals and Freeline Therapeutics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freeline Therapeutics and Day One 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 Day One Biopharmaceuticals are associated (or correlated) with Freeline Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freeline Therapeutics has no effect on the direction of Day One i.e., Day One and Freeline Therapeutics go up and down completely randomly.

Pair Corralation between Day One and Freeline Therapeutics

If you would invest  1,350  in Day One Biopharmaceuticals on September 3, 2024 and sell it today you would earn a total of  34.00  from holding Day One Biopharmaceuticals or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Day One Biopharmaceuticals  vs.  Freeline Therapeutics Holdings

Day One Biopharmaceu

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Day One Biopharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Day One is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Freeline Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeline Therapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Freeline Therapeutics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Day One and Freeline Therapeutics

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

The idea behind Day One Biopharmaceuticals and Freeline Therapeutics Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.