Correlation Between Compass Pathways and Oncology Institute

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

By analyzing existing cross correlation between Compass Pathways Plc and The Oncology Institute, you can compare the effects of market volatilities on Compass Pathways and Oncology Institute 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 Compass Pathways with a short position of Oncology Institute. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compass Pathways and Oncology Institute.

Diversification Opportunities for Compass Pathways and Oncology Institute

0.32

Correlation Coefficient

Compass Pathways  Oncology Institute

Weak diversification

The 3 months correlation between Compass and Oncology is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Compass Pathways Plc and The Oncology Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Oncology Institute and Compass Pathways 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 Compass Pathways Plc are associated (or correlated) with Oncology Institute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Oncology Institute has no effect on the direction of Compass Pathways i.e., Compass Pathways and Oncology Institute go up and down completely randomly.

Pair Corralation between Compass Pathways and Oncology Institute

Given the investment horizon of 90 days Compass Pathways Plc is expected to generate 0.2 times more return on investment than Oncology Institute. However, Compass Pathways Plc is 5.01 times less risky than Oncology Institute. It trades about 0.1 of its potential returns per unit of risk. The Oncology Institute is currently generating about 0.01 per unit of risk. If you would invest  410.00  in Compass Pathways Plc on October 6, 2024 and sell it today you would earn a total of  35.00  from holding Compass Pathways Plc or generate 8.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	80.0%
Values	Daily Returns

Compass Pathways Plc  vs.  The Oncology Institute

Compass Pathways Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Compass Pathways Plc 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 comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

The Oncology Institute

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Oncology Institute are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent forward indicators, Oncology Institute showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Compass Pathways and Oncology Institute

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

The idea behind Compass Pathways Plc and The Oncology Institute 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.