Correlation Between Caribou Biosciences and Personalis

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

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

Diversification Opportunities for Caribou Biosciences and Personalis

-0.02

Correlation Coefficient

Caribou Biosciences  Personalis

Good diversification

The 3 months correlation between Caribou and Personalis is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Personalis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Personalis 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 Personalis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Personalis has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Personalis go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Personalis

Given the investment horizon of 90 days Caribou Biosciences is expected to generate 0.86 times more return on investment than Personalis. However, Caribou Biosciences is 1.16 times less risky than Personalis. It trades about 0.06 of its potential returns per unit of risk. Personalis is currently generating about -0.04 per unit of risk. If you would invest  183.00  in Caribou Biosciences on September 5, 2024 and sell it today you would earn a total of  21.00  from holding Caribou Biosciences or generate 11.48% return on investment over 90 days.

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

Caribou Biosciences  vs.  Personalis

Caribou Biosciences

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caribou Biosciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Caribou Biosciences unveiled solid returns over the last few months and may actually be approaching a breakup point.

Personalis

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Personalis has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Caribou Biosciences and Personalis

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

The idea behind Caribou Biosciences and Personalis 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.