Correlation Between Arcus Biosciences and Summit Therapeutics
Can any of the company-specific risk be diversified away by investing in both Arcus Biosciences and Summit Therapeutics 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 Summit Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arcus Biosciences and Summit Therapeutics PLC, you can compare the effects of market volatilities on Arcus Biosciences and Summit Therapeutics 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 Summit Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arcus Biosciences and Summit Therapeutics.
Diversification Opportunities for Arcus Biosciences and Summit Therapeutics
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Arcus and Summit is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Arcus Biosciences and Summit Therapeutics PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Therapeutics PLC 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 Summit Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Therapeutics PLC has no effect on the direction of Arcus Biosciences i.e., Arcus Biosciences and Summit Therapeutics go up and down completely randomly.
Pair Corralation between Arcus Biosciences and Summit Therapeutics
Given the investment horizon of 90 days Arcus Biosciences is expected to under-perform the Summit Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Arcus Biosciences is 1.22 times less risky than Summit Therapeutics. The stock trades about -0.05 of its potential returns per unit of risk. The Summit Therapeutics PLC is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 2,003 in Summit Therapeutics PLC on September 23, 2024 and sell it today you would lose (216.00) from holding Summit Therapeutics PLC or give up 10.78% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Arcus Biosciences vs. Summit Therapeutics PLC
Performance |
Timeline |
Arcus Biosciences |
Summit Therapeutics PLC |
Arcus Biosciences and Summit Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Arcus Biosciences and Summit Therapeutics
The main advantage of trading using opposite Arcus Biosciences and Summit Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arcus Biosciences position performs unexpectedly, Summit Therapeutics 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 Summit Therapeutics will offset losses from the drop in Summit Therapeutics' long position.Arcus Biosciences vs. Fate Therapeutics | Arcus Biosciences vs. Sana Biotechnology | Arcus Biosciences vs. Caribou Biosciences | Arcus Biosciences vs. Heron Therapeuti |
Summit Therapeutics vs. Fate Therapeutics | Summit Therapeutics vs. Sana Biotechnology | Summit Therapeutics vs. Caribou Biosciences | Summit Therapeutics 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 CEOs Directory module to screen CEOs from public companies around the world.
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