Correlation Between Passage Bio and Homology Medicines

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

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

Diversification Opportunities for Passage Bio and Homology Medicines

0.0

Correlation Coefficient

Passage Bio  Homology Medicines

Pay attention - limited upside

The 3 months correlation between Passage and Homology is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and Homology Medicines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Homology Medicines and Passage 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 Passage Bio are associated (or correlated) with Homology Medicines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Homology Medicines has no effect on the direction of Passage Bio i.e., Passage Bio and Homology Medicines go up and down completely randomly.

Pair Corralation between Passage Bio and Homology Medicines

If you would invest  109.00  in Homology Medicines on August 30, 2024 and sell it today you would earn a total of  0.00  from holding Homology Medicines or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.79%
Values	Daily Returns

Passage Bio  vs.  Homology Medicines

Passage Bio

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Passage Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Passage Bio reported solid returns over the last few months and may actually be approaching a breakup point.

Homology Medicines

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Homology Medicines has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Homology Medicines is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Passage Bio and Homology Medicines

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

The idea behind Passage Bio and Homology Medicines 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.