Correlation Between Brainstorm Cell and Mustang Bio

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

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

Diversification Opportunities for Brainstorm Cell and Mustang Bio

-0.71

Correlation Coefficient

Brainstorm Cell  Mustang Bio

Pay attention - limited upside

The 3 months correlation between Brainstorm and Mustang is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Brainstorm Cell Therapeutics and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio and Brainstorm Cell 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 Brainstorm Cell Therapeutics are associated (or correlated) with Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of Brainstorm Cell i.e., Brainstorm Cell and Mustang Bio go up and down completely randomly.

Pair Corralation between Brainstorm Cell and Mustang Bio

Given the investment horizon of 90 days Brainstorm Cell Therapeutics is expected to generate 1.65 times more return on investment than Mustang Bio. However, Brainstorm Cell is 1.65 times more volatile than Mustang Bio. It trades about -0.01 of its potential returns per unit of risk. Mustang Bio is currently generating about -0.1 per unit of risk. If you would invest  416.00  in Brainstorm Cell Therapeutics on January 19, 2024 and sell it today you would lose (365.00) from holding Brainstorm Cell Therapeutics or give up 87.74% of portfolio value over 90 days.

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

Brainstorm Cell Therapeutics  vs.  Mustang Bio

Brainstorm Cell Ther

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brainstorm Cell Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, Brainstorm Cell demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Mustang Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mustang Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Brainstorm Cell and Mustang Bio

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

The idea behind Brainstorm Cell Therapeutics and Mustang Bio 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.