Correlation Between Erasca and Biocardia
Can any of the company-specific risk be diversified away by investing in both Erasca and Biocardia 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 Erasca and Biocardia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erasca Inc and Biocardia, you can compare the effects of market volatilities on Erasca and Biocardia 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 Erasca with a short position of Biocardia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erasca and Biocardia.
Diversification Opportunities for Erasca and Biocardia
Good diversification
The 3 months correlation between Erasca and Biocardia is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and Biocardia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biocardia and Erasca 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 Erasca Inc are associated (or correlated) with Biocardia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biocardia has no effect on the direction of Erasca i.e., Erasca and Biocardia go up and down completely randomly.
Pair Corralation between Erasca and Biocardia
Given the investment horizon of 90 days Erasca Inc is expected to generate 0.83 times more return on investment than Biocardia. However, Erasca Inc is 1.2 times less risky than Biocardia. It trades about -0.01 of its potential returns per unit of risk. Biocardia is currently generating about -0.06 per unit of risk. If you would invest 274.00 in Erasca Inc on September 25, 2024 and sell it today you would lose (20.00) from holding Erasca Inc or give up 7.3% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Erasca Inc vs. Biocardia
Performance |
Timeline |
Erasca Inc |
Biocardia |
Erasca and Biocardia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Erasca and Biocardia
The main advantage of trading using opposite Erasca and Biocardia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca position performs unexpectedly, Biocardia 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 Biocardia will offset losses from the drop in Biocardia's long position.Erasca vs. Century Therapeutics | Erasca vs. Keros Therapeutics | Erasca vs. Monte Rosa Therapeutics | Erasca vs. Design Therapeutics |
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Check out your portfolio center.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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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