Correlation Between Eyenovia and Eyepoint Pharmaceuticals

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

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

Diversification Opportunities for Eyenovia and Eyepoint Pharmaceuticals

0.23

Correlation Coefficient

Eyenovia  Eyepoint Pharmaceuticals

Modest diversification

The 3 months correlation between Eyenovia and Eyepoint is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Eyenovia and Eyepoint Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eyepoint Pharmaceuticals and Eyenovia 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 Eyenovia are associated (or correlated) with Eyepoint Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eyepoint Pharmaceuticals has no effect on the direction of Eyenovia i.e., Eyenovia and Eyepoint Pharmaceuticals go up and down completely randomly.

Pair Corralation between Eyenovia and Eyepoint Pharmaceuticals

Given the investment horizon of 90 days Eyenovia is expected to under-perform the Eyepoint Pharmaceuticals. In addition to that, Eyenovia is 2.1 times more volatile than Eyepoint Pharmaceuticals. It trades about -0.12 of its total potential returns per unit of risk. Eyepoint Pharmaceuticals is currently generating about 0.04 per unit of volatility. If you would invest  806.00  in Eyepoint Pharmaceuticals on September 5, 2024 and sell it today you would earn a total of  31.00  from holding Eyepoint Pharmaceuticals or generate 3.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Eyenovia  vs.  Eyepoint Pharmaceuticals

Eyenovia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eyenovia 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 technical and fundamental 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.

Eyepoint Pharmaceuticals

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Eyepoint Pharmaceuticals are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eyepoint Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eyenovia and Eyepoint Pharmaceuticals

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

The idea behind Eyenovia and Eyepoint Pharmaceuticals 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 Anywhere module to track or share privately all of your investments from the convenience of any device.