Correlation Between Fate Therapeutics and AC Immune
Can any of the company-specific risk be diversified away by investing in both Fate Therapeutics and AC Immune 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 Fate Therapeutics and AC Immune into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fate Therapeutics and AC Immune, you can compare the effects of market volatilities on Fate Therapeutics and AC Immune 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 Fate Therapeutics with a short position of AC Immune. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fate Therapeutics and AC Immune.
Diversification Opportunities for Fate Therapeutics and AC Immune
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fate and ACIU is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Fate Therapeutics and AC Immune in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AC Immune and Fate 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 Fate Therapeutics are associated (or correlated) with AC Immune. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AC Immune has no effect on the direction of Fate Therapeutics i.e., Fate Therapeutics and AC Immune go up and down completely randomly.
Pair Corralation between Fate Therapeutics and AC Immune
Given the investment horizon of 90 days Fate Therapeutics is expected to under-perform the AC Immune. In addition to that, Fate Therapeutics is 1.18 times more volatile than AC Immune. It trades about -0.03 of its total potential returns per unit of risk. AC Immune is currently generating about -0.03 per unit of volatility. If you would invest 500.00 in AC Immune on September 24, 2024 and sell it today you would lose (232.00) from holding AC Immune or give up 46.4% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Fate Therapeutics vs. AC Immune
Performance |
Timeline |
Fate Therapeutics |
AC Immune |
Fate Therapeutics and AC Immune Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fate Therapeutics and AC Immune
The main advantage of trading using opposite Fate Therapeutics and AC Immune positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fate Therapeutics position performs unexpectedly, AC Immune 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 AC Immune will offset losses from the drop in AC Immune's long position.Fate Therapeutics vs. Atara Biotherapeutics | Fate Therapeutics vs. Sana Biotechnology | Fate Therapeutics vs. Caribou Biosciences | Fate Therapeutics vs. Arcus Biosciences |
AC Immune vs. Fate Therapeutics | AC Immune vs. Sana Biotechnology | AC Immune vs. Caribou Biosciences | AC Immune vs. Arcus Biosciences |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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