Correlation Between Caribou Biosciences and Annexon

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Can any of the company-specific risk be diversified away by investing in both Caribou Biosciences and Annexon 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 Caribou Biosciences and Annexon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caribou Biosciences and Annexon, you can compare the effects of market volatilities on Caribou Biosciences and Annexon 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 Caribou Biosciences with a short position of Annexon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caribou Biosciences and Annexon.

Diversification Opportunities for Caribou Biosciences and Annexon

0.12
  Correlation Coefficient

Average diversification

The 3 months correlation between Caribou and Annexon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Annexon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Annexon and Caribou Biosciences 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 Caribou Biosciences are associated (or correlated) with Annexon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Annexon has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Annexon go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Annexon

Given the investment horizon of 90 days Caribou Biosciences is expected to generate 1.3 times more return on investment than Annexon. However, Caribou Biosciences is 1.3 times more volatile than Annexon. It trades about -0.02 of its potential returns per unit of risk. Annexon is currently generating about -0.13 per unit of risk. If you would invest  207.00  in Caribou Biosciences on September 19, 2024 and sell it today you would lose (29.00) from holding Caribou Biosciences or give up 14.01% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.44%
ValuesDaily Returns

Caribou Biosciences  vs.  Annexon

 Performance 
       Timeline  
Caribou Biosciences 

Risk-Adjusted Performance

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Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Annexon 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Annexon 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 fairly 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.

Caribou Biosciences and Annexon Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Caribou Biosciences and Annexon

The main advantage of trading using opposite Caribou Biosciences and Annexon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caribou Biosciences position performs unexpectedly, Annexon 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 Annexon will offset losses from the drop in Annexon's long position.
The idea behind Caribou Biosciences and Annexon 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.

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