Correlation Between Cardano and Spruce Biosciences

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

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

Diversification Opportunities for Cardano and Spruce Biosciences

-0.3

Correlation Coefficient

Cardano  Spruce Biosciences

Very good diversification

The 3 months correlation between Cardano and Spruce is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cardano and Spruce Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spruce Biosciences and Cardano 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 Cardano are associated (or correlated) with Spruce Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spruce Biosciences has no effect on the direction of Cardano i.e., Cardano and Spruce Biosciences go up and down completely randomly.

Pair Corralation between Cardano and Spruce Biosciences

Assuming the 90 days trading horizon Cardano is expected to generate 1.1 times more return on investment than Spruce Biosciences. However, Cardano is 1.1 times more volatile than Spruce Biosciences. It trades about 0.02 of its potential returns per unit of risk. Spruce Biosciences is currently generating about -0.23 per unit of risk. If you would invest  102.00  in Cardano on October 10, 2024 and sell it today you would lose (1.00) from holding Cardano or give up 0.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Cardano  vs.  Spruce Biosciences

Cardano

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cardano are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cardano exhibited solid returns over the last few months and may actually be approaching a breakup point.

Spruce Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spruce Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Spruce Biosciences is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cardano and Spruce Biosciences

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

The idea behind Cardano and Spruce Biosciences 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..