Correlation Between Vericel Corp and Equillium

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

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

Diversification Opportunities for Vericel Corp and Equillium

0.49

Correlation Coefficient

Vericel Corp  Equillium

Very weak diversification

The 3 months correlation between Vericel and Equillium is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Vericel Corp i.e., Vericel Corp and Equillium go up and down completely randomly.

Pair Corralation between Vericel Corp and Equillium

Given the investment horizon of 90 days Vericel Corp is expected to generate 11.52 times less return on investment than Equillium. But when comparing it to its historical volatility, Vericel Corp Ord is 5.09 times less risky than Equillium. It trades about 0.07 of its potential returns per unit of risk. Equillium is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  85.00  in Equillium on January 26, 2024 and sell it today you would earn a total of  94.00  from holding Equillium or generate 110.59% return on investment over 90 days.

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

Vericel Corp Ord  vs.  Equillium

Vericel Corp Ord

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Vericel Corp may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Equillium

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Equillium reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vericel Corp and Equillium

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

The idea behind Vericel Corp Ord and Equillium 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 AI Investment Finder module to use AI to screen and filter profitable investment opportunities.