Correlation Between Caribou Biosciences and Monopar Therapeutics

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

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

Diversification Opportunities for Caribou Biosciences and Monopar Therapeutics

0.17

Correlation Coefficient

Caribou Biosciences  Monopar Therapeutics

Average diversification

The 3 months correlation between Caribou and Monopar is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Monopar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monopar Therapeutics 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 Monopar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monopar Therapeutics has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Monopar Therapeutics go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Monopar Therapeutics

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the Monopar Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Caribou Biosciences is 7.25 times less risky than Monopar Therapeutics. The stock trades about -0.05 of its potential returns per unit of risk. The Monopar Therapeutics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  147.00  in Monopar Therapeutics on September 23, 2024 and sell it today you would earn a total of  2,435  from holding Monopar Therapeutics or generate 1656.46% return on investment over 90 days.

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

Caribou Biosciences  vs.  Monopar Therapeutics

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Monopar Therapeutics

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caribou Biosciences and Monopar Therapeutics

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

The idea behind Caribou Biosciences and Monopar 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.