Correlation Between Generation Bio and Erasca

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

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

Diversification Opportunities for Generation Bio and Erasca

0.11

Correlation Coefficient

Generation Bio  Erasca

Average diversification

The 3 months correlation between Generation and Erasca is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Generation Bio Co and Erasca Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Erasca Inc and Generation Bio 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 Generation Bio Co are associated (or correlated) with Erasca. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Erasca Inc has no effect on the direction of Generation Bio i.e., Generation Bio and Erasca go up and down completely randomly.

Pair Corralation between Generation Bio and Erasca

Given the investment horizon of 90 days Generation Bio is expected to generate 5.28 times less return on investment than Erasca. In addition to that, Generation Bio is 1.6 times more volatile than Erasca Inc. It trades about 0.0 of its total potential returns per unit of risk. Erasca Inc is currently generating about 0.01 per unit of volatility. If you would invest  383.00  in Erasca Inc on August 31, 2024 and sell it today you would lose (97.00) from holding Erasca Inc or give up 25.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Generation Bio Co  vs.  Erasca Inc

Generation Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Generation Bio Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Erasca Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Erasca Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Erasca may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Generation Bio and Erasca

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

The idea behind Generation Bio Co and Erasca Inc 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..