Correlation Between Forte Biosciences and CureVac NV

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

By analyzing existing cross correlation between Forte Biosciences and CureVac NV, you can compare the effects of market volatilities on Forte Biosciences and CureVac NV 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 Forte Biosciences with a short position of CureVac NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Forte Biosciences and CureVac NV.

Diversification Opportunities for Forte Biosciences and CureVac NV

-0.69

Correlation Coefficient

Forte Biosciences  CureVac NV

Excellent diversification

The 3 months correlation between Forte and CureVac is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Forte Biosciences and CureVac NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CureVac NV and Forte Biosciences 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 Forte Biosciences are associated (or correlated) with CureVac NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CureVac NV has no effect on the direction of Forte Biosciences i.e., Forte Biosciences and CureVac NV go up and down completely randomly.

Pair Corralation between Forte Biosciences and CureVac NV

Given the investment horizon of 90 days Forte Biosciences is expected to under-perform the CureVac NV. But the stock apears to be less risky and, when comparing its historical volatility, Forte Biosciences is 1.21 times less risky than CureVac NV. The stock trades about -0.04 of its potential returns per unit of risk. The CureVac NV is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  337.00  in CureVac NV on March 4, 2024 and sell it today you would earn a total of  52.00  from holding CureVac NV or generate 15.43% return on investment over 90 days.

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

Forte Biosciences  vs.  CureVac NV

Forte Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forte Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

CureVac NV

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CureVac NV are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, CureVac NV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forte Biosciences and CureVac NV

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

The idea behind Forte Biosciences and CureVac NV 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.