Correlation Between CRISPR Therapeutics and Healthpeak Properties

Can any of the company-specific risk be diversified away by investing in both CRISPR Therapeutics and Healthpeak Properties 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 Healthpeak Properties 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 Healthpeak Properties, you can compare the effects of market volatilities on CRISPR Therapeutics and Healthpeak Properties 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 Healthpeak Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of CRISPR Therapeutics and Healthpeak Properties.

Diversification Opportunities for CRISPR Therapeutics and Healthpeak Properties

0.74

Correlation Coefficient

CRISPR Therapeutics  Healthpeak Properties

Poor diversification

The 3 months correlation between CRISPR and Healthpeak is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding CRISPR Therapeutics AG and Healthpeak Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Healthpeak Properties 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 Healthpeak Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Healthpeak Properties has no effect on the direction of CRISPR Therapeutics i.e., CRISPR Therapeutics and Healthpeak Properties go up and down completely randomly.

Pair Corralation between CRISPR Therapeutics and Healthpeak Properties

Assuming the 90 days trading horizon CRISPR Therapeutics is expected to generate 1.0 times less return on investment than Healthpeak Properties. In addition to that, CRISPR Therapeutics is 1.02 times more volatile than Healthpeak Properties. It trades about 0.02 of its total potential returns per unit of risk. Healthpeak Properties is currently generating about 0.02 per unit of volatility. If you would invest  12,589  in Healthpeak Properties on October 23, 2024 and sell it today you would lose (101.00) from holding Healthpeak Properties or give up 0.8% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.49%
Values	Daily Returns

CRISPR Therapeutics AG  vs.  Healthpeak Properties

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.

Healthpeak Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CRISPR Therapeutics and Healthpeak Properties

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

The idea behind CRISPR Therapeutics AG and Healthpeak Properties 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.

Check out your portfolio center.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.