Correlation Between Bio Path and First Trust
Can any of the company-specific risk be diversified away by investing in both Bio Path and First Trust 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 Bio Path and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bio Path Holdings and First Trust Japan, you can compare the effects of market volatilities on Bio Path and First Trust 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 Bio Path with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bio Path and First Trust.
Diversification Opportunities for Bio Path and First Trust
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bio and First is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Bio Path Holdings and First Trust Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Japan and Bio Path 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 Bio Path Holdings are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Japan has no effect on the direction of Bio Path i.e., Bio Path and First Trust go up and down completely randomly.
Pair Corralation between Bio Path and First Trust
Given the investment horizon of 90 days Bio Path Holdings is expected to under-perform the First Trust. In addition to that, Bio Path is 11.75 times more volatile than First Trust Japan. It trades about -0.15 of its total potential returns per unit of risk. First Trust Japan is currently generating about -0.23 per unit of volatility. If you would invest 5,523 in First Trust Japan on January 26, 2024 and sell it today you would lose (256.00) from holding First Trust Japan or give up 4.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bio Path Holdings vs. First Trust Japan
Performance |
| Timeline |
| Bio Path Holdings |
| First Trust Japan |
Bio Path and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bio Path and First Trust
The main advantage of trading using opposite Bio Path and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio Path position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.| Bio Path vs. Capricor Therapeutics | Bio Path vs. NextCure | Bio Path vs. Pulmatrix | Bio Path vs. Crinetics Pharmaceuticals |
| First Trust vs. First Trust United | First Trust vs. First Trust Asia | First Trust vs. First Trust Germany | First Trust vs. First Trust Switzerland |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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