Correlation Between Biocardia and Spyre Therapeutics

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

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

Diversification Opportunities for Biocardia and Spyre Therapeutics

0.21

Correlation Coefficient

Biocardia  Spyre Therapeutics

Modest diversification

The 3 months correlation between Biocardia and Spyre is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Biocardia and Spyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spyre Therapeutics and Biocardia 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 Biocardia are associated (or correlated) with Spyre Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spyre Therapeutics has no effect on the direction of Biocardia i.e., Biocardia and Spyre Therapeutics go up and down completely randomly.

Pair Corralation between Biocardia and Spyre Therapeutics

Given the investment horizon of 90 days Biocardia is expected to under-perform the Spyre Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Biocardia is 1.53 times less risky than Spyre Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Spyre Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,053  in Spyre Therapeutics on September 21, 2024 and sell it today you would earn a total of  1,260  from holding Spyre Therapeutics or generate 119.66% return on investment over 90 days.

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

Biocardia  vs.  Spyre Therapeutics

Biocardia

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Biocardia has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Spyre Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spyre Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Biocardia and Spyre Therapeutics

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

The idea behind Biocardia and Spyre 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..