Correlation Between Chemours and Spyre Therapeutics

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

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

Diversification Opportunities for Chemours and Spyre Therapeutics

0.21

Correlation Coefficient

Chemours  Spyre Therapeutics

Modest diversification

The 3 months correlation between Chemours and Spyre is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Chemours Co and Spyre Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spyre Therapeutics and Chemours 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 Chemours Co 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 Chemours i.e., Chemours and Spyre Therapeutics go up and down completely randomly.

Pair Corralation between Chemours and Spyre Therapeutics

Allowing for the 90-day total investment horizon Chemours Co is expected to generate 1.01 times more return on investment than Spyre Therapeutics. However, Chemours is 1.01 times more volatile than Spyre Therapeutics. It trades about 0.19 of its potential returns per unit of risk. Spyre Therapeutics is currently generating about -0.22 per unit of risk. If you would invest  1,754  in Chemours Co on October 22, 2024 and sell it today you would earn a total of  186.00  from holding Chemours Co or generate 10.6% return on investment over 90 days.

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

Chemours Co  vs.  Spyre Therapeutics

Chemours

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Chemours Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile fundamental indicators, Chemours may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Chemours and Spyre Therapeutics

The main advantage of trading using opposite Chemours and Spyre Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chemours 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 Chemours Co 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.

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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.