Correlation Between Editas Medicine and Equillium
Can any of the company-specific risk be diversified away by investing in both Editas Medicine and Equillium 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 Editas Medicine and Equillium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Editas Medicine and Equillium, you can compare the effects of market volatilities on Editas Medicine and Equillium 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 Editas Medicine with a short position of Equillium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Editas Medicine and Equillium.
Diversification Opportunities for Editas Medicine and Equillium
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Editas and Equillium is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Editas Medicine and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Editas Medicine 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 Editas Medicine are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Editas Medicine i.e., Editas Medicine and Equillium go up and down completely randomly.
Pair Corralation between Editas Medicine and Equillium
Given the investment horizon of 90 days Editas Medicine is expected to under-perform the Equillium. But the stock apears to be less risky and, when comparing its historical volatility, Editas Medicine is 2.19 times less risky than Equillium. The stock trades about -0.09 of its potential returns per unit of risk. The Equillium is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Equillium on January 24, 2024 and sell it today you would earn a total of 85.00 from holding Equillium or generate 106.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Editas Medicine vs. Equillium
Performance |
| Timeline |
| Editas Medicine |
| Equillium |
Editas Medicine and Equillium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Editas Medicine and Equillium
The main advantage of trading using opposite Editas Medicine and Equillium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Editas Medicine position performs unexpectedly, Equillium 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 Equillium will offset losses from the drop in Equillium's long position.| Editas Medicine vs. Beam TherapeuticsInc | Editas Medicine vs. Crispr Therapeutics AG | Editas Medicine vs. Caribou Biosciences | Editas Medicine vs. Verve Therapeutics |
| Equillium vs. Lyra TherapeuticsInc | Equillium vs. Hookipa Pharma | Equillium vs. Jasper Therapeutics | Equillium vs. Cingulate Warrants |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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