Correlation Between Edgewise Therapeutics and Cingulate

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

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

Diversification Opportunities for Edgewise Therapeutics and Cingulate

-0.74

Correlation Coefficient

Edgewise Therapeutics  Cingulate

Pay attention - limited upside

The 3 months correlation between Edgewise and Cingulate is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Edgewise Therapeutics and Cingulate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cingulate and Edgewise Therapeutics 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 Edgewise Therapeutics are associated (or correlated) with Cingulate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cingulate has no effect on the direction of Edgewise Therapeutics i.e., Edgewise Therapeutics and Cingulate go up and down completely randomly.

Pair Corralation between Edgewise Therapeutics and Cingulate

Given the investment horizon of 90 days Edgewise Therapeutics is expected to under-perform the Cingulate. But the stock apears to be less risky and, when comparing its historical volatility, Edgewise Therapeutics is 3.32 times less risky than Cingulate. The stock trades about -0.01 of its potential returns per unit of risk. The Cingulate is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  426.00  in Cingulate on August 31, 2024 and sell it today you would earn a total of  10.00  from holding Cingulate or generate 2.35% return on investment over 90 days.

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

Edgewise Therapeutics  vs.  Cingulate

Edgewise Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Edgewise Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Edgewise Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Cingulate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cingulate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Edgewise Therapeutics and Cingulate

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

The idea behind Edgewise Therapeutics and Cingulate 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.