Correlation Between Aeglea Bio and Spero Therapeutics

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

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

Diversification Opportunities for Aeglea Bio and Spero Therapeutics

0.0

Correlation Coefficient

Aeglea Bio  Spero Therapeutics

Pay attention - limited upside

The 3 months correlation between Aeglea and Spero is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Aeglea Bio Therapeutics and Spero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spero Therapeutics and Aeglea 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 Aeglea Bio Therapeutics are associated (or correlated) with Spero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spero Therapeutics has no effect on the direction of Aeglea Bio i.e., Aeglea Bio and Spero Therapeutics go up and down completely randomly.

Pair Corralation between Aeglea Bio and Spero Therapeutics

If you would invest (100.00) in Aeglea Bio Therapeutics on December 25, 2024 and sell it today you would earn a total of  100.00  from holding Aeglea Bio Therapeutics or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Aeglea Bio Therapeutics  vs.  Spero Therapeutics

Aeglea Bio Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aeglea Bio Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Aeglea Bio is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Spero Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Spero Therapeutics 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 healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Aeglea Bio and Spero Therapeutics

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

The idea behind Aeglea Bio Therapeutics and Spero 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..