Correlation Between Mustang Bio and Abeona Therapeutics

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

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

Diversification Opportunities for Mustang Bio and Abeona Therapeutics

-0.4

Correlation Coefficient

Mustang Bio  Abeona Therapeutics

Very good diversification

The 3 months correlation between Mustang and Abeona is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and Abeona Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Abeona Therapeutics and Mustang Bio 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 Mustang Bio are associated (or correlated) with Abeona Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Abeona Therapeutics has no effect on the direction of Mustang Bio i.e., Mustang Bio and Abeona Therapeutics go up and down completely randomly.

Pair Corralation between Mustang Bio and Abeona Therapeutics

Given the investment horizon of 90 days Mustang Bio is expected to under-perform the Abeona Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Mustang Bio is 1.07 times less risky than Abeona Therapeutics. The stock trades about -0.16 of its potential returns per unit of risk. The Abeona Therapeutics is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  324.00  in Abeona Therapeutics on January 26, 2024 and sell it today you would lose (7.00) from holding Abeona Therapeutics or give up 2.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	99.6%
Values	Daily Returns

Mustang Bio  vs.  Abeona Therapeutics

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 uncertain 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.

Abeona Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Abeona Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Abeona Therapeutics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mustang Bio and Abeona Therapeutics

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

The idea behind Mustang Bio and Abeona 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.