Correlation Between Bellevue Healthcare and Viridian Therapeutics

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

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

Diversification Opportunities for Bellevue Healthcare and Viridian Therapeutics

0.68

Correlation Coefficient

Bellevue Healthcare  Viridian Therapeutics

Poor diversification

The 3 months correlation between Bellevue and Viridian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Bellevue Healthcare Trust and Viridian Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viridian Therapeutics and Bellevue Healthcare 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 Bellevue Healthcare Trust are associated (or correlated) with Viridian Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viridian Therapeutics has no effect on the direction of Bellevue Healthcare i.e., Bellevue Healthcare and Viridian Therapeutics go up and down completely randomly.

Pair Corralation between Bellevue Healthcare and Viridian Therapeutics

Assuming the 90 days trading horizon Bellevue Healthcare is expected to generate 32.98 times less return on investment than Viridian Therapeutics. But when comparing it to its historical volatility, Bellevue Healthcare Trust is 4.69 times less risky than Viridian Therapeutics. It trades about 0.01 of its potential returns per unit of risk. Viridian Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,308  in Viridian Therapeutics on September 29, 2024 and sell it today you would earn a total of  610.00  from holding Viridian Therapeutics or generate 46.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.45%
Values	Daily Returns

Bellevue Healthcare Trust  vs.  Viridian Therapeutics

Bellevue Healthcare Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bellevue Healthcare Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Bellevue Healthcare is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Viridian Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viridian Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Bellevue Healthcare and Viridian Therapeutics

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

The idea behind Bellevue Healthcare Trust and Viridian 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.