Correlation Between Aerovate Therapeutics and Magenta Therapeutics

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

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

Diversification Opportunities for Aerovate Therapeutics and Magenta Therapeutics

0.0

Correlation Coefficient

Aerovate Therapeutics  Magenta Therapeutics

Pay attention - limited upside

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

Pair Corralation between Aerovate Therapeutics and Magenta Therapeutics

If you would invest (100.00) in Magenta Therapeutics on December 1, 2024 and sell it today you would earn a total of  100.00  from holding Magenta 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

Aerovate Therapeutics  vs.  Magenta Therapeutics

Aerovate Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aerovate Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Magenta Therapeutics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Aerovate Therapeutics and Magenta Therapeutics

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

The idea behind Aerovate Therapeutics and Magenta 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 Stocks Directory module to find actively traded stocks across global markets.