Correlation Between Regenxbio and Unity Biotechnology

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

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

Diversification Opportunities for Regenxbio and Unity Biotechnology

0.42

Correlation Coefficient

Regenxbio  Unity Biotechnology

Very weak diversification

The 3 months correlation between Regenxbio and Unity is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Regenxbio and Unity Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Unity Biotechnology and Regenxbio 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 Regenxbio are associated (or correlated) with Unity Biotechnology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Unity Biotechnology has no effect on the direction of Regenxbio i.e., Regenxbio and Unity Biotechnology go up and down completely randomly.

Pair Corralation between Regenxbio and Unity Biotechnology

Given the investment horizon of 90 days Regenxbio is expected to under-perform the Unity Biotechnology. But the stock apears to be less risky and, when comparing its historical volatility, Regenxbio is 1.37 times less risky than Unity Biotechnology. The stock trades about -0.02 of its potential returns per unit of risk. The Unity Biotechnology is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  292.00  in Unity Biotechnology on August 31, 2024 and sell it today you would lose (171.00) from holding Unity Biotechnology or give up 58.56% of portfolio value over 90 days.

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

Regenxbio  vs.  Unity Biotechnology

Regenxbio

Risk-Adjusted Performance

0 of 100

Very Weak

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

Unity Biotechnology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unity Biotechnology 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 fundamental drivers remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Regenxbio and Unity Biotechnology

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

The idea behind Regenxbio and Unity Biotechnology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.