Correlation Between Spero Therapeutics and Immuneering Corp

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

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

Diversification Opportunities for Spero Therapeutics and Immuneering Corp

-0.21

Correlation Coefficient

Spero Therapeutics  Immuneering Corp

Very good diversification

The 3 months correlation between Spero and Immuneering is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Spero Therapeutics and Immuneering Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immuneering Corp and Spero Therapeutics 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 Spero Therapeutics are associated (or correlated) with Immuneering Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immuneering Corp has no effect on the direction of Spero Therapeutics i.e., Spero Therapeutics and Immuneering Corp go up and down completely randomly.

Pair Corralation between Spero Therapeutics and Immuneering Corp

Given the investment horizon of 90 days Spero Therapeutics is expected to under-perform the Immuneering Corp. But the stock apears to be less risky and, when comparing its historical volatility, Spero Therapeutics is 4.05 times less risky than Immuneering Corp. The stock trades about -0.09 of its potential returns per unit of risk. The Immuneering Corp is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  121.00  in Immuneering Corp on August 31, 2024 and sell it today you would earn a total of  85.00  from holding Immuneering Corp or generate 70.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Spero Therapeutics  vs.  Immuneering Corp

Spero Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spero Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic 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.

Immuneering Corp

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Immuneering Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Immuneering Corp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spero Therapeutics and Immuneering Corp

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

The idea behind Spero Therapeutics and Immuneering Corp 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.