Correlation Between Elevation Oncology and Beam Therapeutics

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

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

Diversification Opportunities for Elevation Oncology and Beam Therapeutics

0.36

Correlation Coefficient

Elevation Oncology  Beam Therapeutics

Weak diversification

The 3 months correlation between Elevation and Beam is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Elevation Oncology and Beam Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beam Therapeutics and Elevation Oncology 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 Elevation Oncology are associated (or correlated) with Beam Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beam Therapeutics has no effect on the direction of Elevation Oncology i.e., Elevation Oncology and Beam Therapeutics go up and down completely randomly.

Pair Corralation between Elevation Oncology and Beam Therapeutics

Given the investment horizon of 90 days Elevation Oncology is expected to under-perform the Beam Therapeutics. In addition to that, Elevation Oncology is 1.05 times more volatile than Beam Therapeutics. It trades about -0.06 of its total potential returns per unit of risk. Beam Therapeutics is currently generating about 0.03 per unit of volatility. If you would invest  2,668  in Beam Therapeutics on August 30, 2024 and sell it today you would earn a total of  52.00  from holding Beam Therapeutics or generate 1.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Elevation Oncology  vs.  Beam Therapeutics

Elevation Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elevation Oncology 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 technical and fundamental indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Beam Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Beam Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Beam Therapeutics may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Elevation Oncology and Beam Therapeutics

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

The idea behind Elevation Oncology and Beam 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.