Correlation Between BIOGEN and CTS

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

By analyzing existing cross correlation between BIOGEN INC 52 and CTS Corporation, you can compare the effects of market volatilities on BIOGEN and CTS 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 BIOGEN with a short position of CTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of BIOGEN and CTS.

Diversification Opportunities for BIOGEN and CTS

-0.56

Correlation Coefficient

BIOGEN  CTS

Excellent diversification

The 3 months correlation between BIOGEN and CTS is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding BIOGEN INC 52 and CTS Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CTS Corporation and BIOGEN 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 BIOGEN INC 52 are associated (or correlated) with CTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CTS Corporation has no effect on the direction of BIOGEN i.e., BIOGEN and CTS go up and down completely randomly.

Pair Corralation between BIOGEN and CTS

Assuming the 90 days trading horizon BIOGEN INC 52 is expected to under-perform the CTS. But the bond apears to be less risky and, when comparing its historical volatility, BIOGEN INC 52 is 1.89 times less risky than CTS. The bond trades about -0.05 of its potential returns per unit of risk. The CTS Corporation is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  4,648  in CTS Corporation on September 14, 2024 and sell it today you would earn a total of  983.00  from holding CTS Corporation or generate 21.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

BIOGEN INC 52  vs.  CTS Corp.

BIOGEN INC 52

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BIOGEN INC 52 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, BIOGEN is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

CTS Corporation

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CTS Corporation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CTS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BIOGEN and CTS

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

The idea behind BIOGEN INC 52 and CTS Corporation 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.