Correlation Between CRISPR Therapeutics and Norwegian Cruise

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

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

Diversification Opportunities for CRISPR Therapeutics and Norwegian Cruise

0.18

Correlation Coefficient

CRISPR Therapeutics  Norwegian Cruise

Average diversification

The 3 months correlation between CRISPR and Norwegian is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CRISPR Therapeutics AG and Norwegian Cruise Line in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Cruise Line and CRISPR 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 CRISPR Therapeutics AG are associated (or correlated) with Norwegian Cruise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Cruise Line has no effect on the direction of CRISPR Therapeutics i.e., CRISPR Therapeutics and Norwegian Cruise go up and down completely randomly.

Pair Corralation between CRISPR Therapeutics and Norwegian Cruise

Assuming the 90 days trading horizon CRISPR Therapeutics AG is expected to under-perform the Norwegian Cruise. In addition to that, CRISPR Therapeutics is 1.53 times more volatile than Norwegian Cruise Line. It trades about -0.03 of its total potential returns per unit of risk. Norwegian Cruise Line is currently generating about 0.18 per unit of volatility. If you would invest  13,208  in Norwegian Cruise Line on October 24, 2024 and sell it today you would earn a total of  3,342  from holding Norwegian Cruise Line or generate 25.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

CRISPR Therapeutics AG  vs.  Norwegian Cruise Line

CRISPR Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CRISPR Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Norwegian Cruise Line

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Norwegian Cruise Line are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Norwegian Cruise sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CRISPR Therapeutics and Norwegian Cruise

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

The idea behind CRISPR Therapeutics AG and Norwegian Cruise Line 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.