Correlation Between Regenxbio and Larimar Therapeutics

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

By analyzing existing cross correlation between Regenxbio and Larimar Therapeutics, you can compare the effects of market volatilities on Regenxbio and Larimar Therapeutics 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 Larimar Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Regenxbio and Larimar Therapeutics.

Diversification Opportunities for Regenxbio and Larimar Therapeutics

0.34

Correlation Coefficient

Regenxbio  Larimar Therapeutics

Weak diversification

The 3 months correlation between Regenxbio and Larimar is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Regenxbio and Larimar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Larimar Therapeutics 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 Larimar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Larimar Therapeutics has no effect on the direction of Regenxbio i.e., Regenxbio and Larimar Therapeutics go up and down completely randomly.

Pair Corralation between Regenxbio and Larimar Therapeutics

Given the investment horizon of 90 days Regenxbio is expected to generate 13.97 times less return on investment than Larimar Therapeutics. But when comparing it to its historical volatility, Regenxbio is 2.2 times less risky than Larimar Therapeutics. It trades about 0.04 of its potential returns per unit of risk. Larimar Therapeutics is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest  640.00  in Larimar Therapeutics on February 21, 2024 and sell it today you would earn a total of  210.00  from holding Larimar Therapeutics or generate 32.81% return on investment over 90 days.

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

Regenxbio  vs.  Larimar Therapeutics

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 latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Larimar Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Larimar Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's primary indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Regenxbio and Larimar Therapeutics

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

The idea behind Regenxbio and Larimar Therapeutics 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.