Correlation Between Cytodyn and BridgeBio Pharma

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

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

Diversification Opportunities for Cytodyn and BridgeBio Pharma

0.28

Correlation Coefficient

Cytodyn  BridgeBio Pharma

Modest diversification

The 3 months correlation between Cytodyn and BridgeBio is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cytodyn and BridgeBio Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BridgeBio Pharma and Cytodyn 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 Cytodyn are associated (or correlated) with BridgeBio Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BridgeBio Pharma has no effect on the direction of Cytodyn i.e., Cytodyn and BridgeBio Pharma go up and down completely randomly.

Pair Corralation between Cytodyn and BridgeBio Pharma

Given the investment horizon of 90 days Cytodyn is expected to under-perform the BridgeBio Pharma. In addition to that, Cytodyn is 1.23 times more volatile than BridgeBio Pharma. It trades about -0.11 of its total potential returns per unit of risk. BridgeBio Pharma is currently generating about -0.01 per unit of volatility. If you would invest  3,070  in BridgeBio Pharma on September 8, 2024 and sell it today you would lose (191.00) from holding BridgeBio Pharma or give up 6.22% of portfolio value over 90 days.

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

Cytodyn  vs.  BridgeBio Pharma

Cytodyn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cytodyn has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental 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.

BridgeBio Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BridgeBio Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, BridgeBio Pharma is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cytodyn and BridgeBio Pharma

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

The idea behind Cytodyn and BridgeBio Pharma 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.