Correlation Between Arcus Biosciences and Dominari Holdings

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

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

Diversification Opportunities for Arcus Biosciences and Dominari Holdings

0.32

Correlation Coefficient

Arcus Biosciences  Dominari Holdings

Weak diversification

The 3 months correlation between Arcus and Dominari is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Arcus Biosciences and Dominari Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dominari Holdings and Arcus Biosciences 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 Arcus Biosciences are associated (or correlated) with Dominari Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dominari Holdings has no effect on the direction of Arcus Biosciences i.e., Arcus Biosciences and Dominari Holdings go up and down completely randomly.

Pair Corralation between Arcus Biosciences and Dominari Holdings

Given the investment horizon of 90 days Arcus Biosciences is expected to generate 1.1 times more return on investment than Dominari Holdings. However, Arcus Biosciences is 1.1 times more volatile than Dominari Holdings. It trades about 0.03 of its potential returns per unit of risk. Dominari Holdings is currently generating about -0.17 per unit of risk. If you would invest  1,539  in Arcus Biosciences on September 26, 2024 and sell it today you would earn a total of  52.00  from holding Arcus Biosciences or generate 3.38% return on investment over 90 days.

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

Arcus Biosciences  vs.  Dominari Holdings

Arcus Biosciences

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arcus Biosciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Arcus Biosciences may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dominari Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dominari Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's primary indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Arcus Biosciences and Dominari Holdings

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

The idea behind Arcus Biosciences and Dominari Holdings 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.