Correlation Between Dynavax Technologies and Capricor Therapeutics

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

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

Diversification Opportunities for Dynavax Technologies and Capricor Therapeutics

-0.4

Correlation Coefficient

Dynavax Technologies  Capricor Therapeutics

Very good diversification

The 3 months correlation between Dynavax and Capricor is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dynavax Technologies and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Dynavax Technologies 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 Dynavax Technologies are associated (or correlated) with Capricor Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricor Therapeutics has no effect on the direction of Dynavax Technologies i.e., Dynavax Technologies and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Dynavax Technologies and Capricor Therapeutics

Given the investment horizon of 90 days Dynavax Technologies is expected to generate 10.92 times less return on investment than Capricor Therapeutics. But when comparing it to its historical volatility, Dynavax Technologies is 3.0 times less risky than Capricor Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Capricor Therapeutics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  425.00  in Capricor Therapeutics on October 21, 2024 and sell it today you would earn a total of  945.00  from holding Capricor Therapeutics or generate 222.35% return on investment over 90 days.

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

Dynavax Technologies  vs.  Capricor Therapeutics

Dynavax Technologies

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dynavax Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Dynavax Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Capricor Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Capricor Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Dynavax Technologies and Capricor Therapeutics

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

The idea behind Dynavax Technologies and Capricor 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.