Correlation Between IMARA and Brickell Biotech

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

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

Diversification Opportunities for IMARA and Brickell Biotech

0.8
  Correlation Coefficient
IMARA Inc
Brickell Biotech

Very poor diversification

The 3 months correlation between IMARA and Brickell is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding IMARA Inc and Brickell Biotech in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Brickell Biotech and IMARA 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 IMARA Inc are associated (or correlated) with Brickell Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brickell Biotech has no effect on the direction of IMARA i.e., IMARA and Brickell Biotech go up and down completely randomly.

Pair Corralation between IMARA and Brickell Biotech

Given the investment horizon of 90 days IMARA Inc is expected to under-perform the Brickell Biotech. But the stock apears to be less risky and, when comparing its historical volatility, IMARA Inc is 1.31 times less risky than Brickell Biotech. The stock trades about -0.03 of its potential returns per unit of risk. The Brickell Biotech is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  172.00  in Brickell Biotech on September 1, 2021 and sell it today you would lose (141.00)  from holding Brickell Biotech or give up 81.98% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy87.53%
ValuesDaily Returns

IMARA Inc  vs.  Brickell Biotech

 Performance (%) 
      Timeline 
IMARA Inc 
IMARA Performance
0 of 100
Over the last 90 days IMARA Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2021. The current disturbance may also be a sign of long term up-swing for the company investors.

IMARA Price Channel

Brickell Biotech 
Brickell Performance
0 of 100
Over the last 90 days Brickell Biotech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in December 2021. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Brickell Price Channel

IMARA and Brickell Biotech Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with IMARA and Brickell Biotech

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

IMARA Inc

Pair trading matchups for IMARA

The idea behind IMARA Inc and Brickell Biotech 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 Shere Portfolio module to track or share privately all of your investments from the convenience of any device.

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