Correlation Between Enveric Biosciences and Beam Therapeutics

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

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

Diversification Opportunities for Enveric Biosciences and Beam Therapeutics

-0.25

Correlation Coefficient

Enveric Biosciences  Beam Therapeutics

Very good diversification

The 3 months correlation between Enveric and Beam is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Enveric Biosciences and Beam Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beam Therapeutics and Enveric 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 Enveric Biosciences 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 Enveric Biosciences i.e., Enveric Biosciences and Beam Therapeutics go up and down completely randomly.

Pair Corralation between Enveric Biosciences and Beam Therapeutics

Given the investment horizon of 90 days Enveric Biosciences is expected to under-perform the Beam Therapeutics. In addition to that, Enveric Biosciences is 3.54 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  2,527  in Beam Therapeutics on December 28, 2024 and sell it today you would lose (306.00) from holding Beam Therapeutics or give up 12.11% of portfolio value over 90 days.

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

Enveric Biosciences  vs.  Beam Therapeutics

Enveric Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enveric Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Beam Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Beam Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Enveric Biosciences and Beam Therapeutics

The main advantage of trading using opposite Enveric Biosciences and Beam Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enveric Biosciences 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 Enveric Biosciences 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.

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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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.