Correlation Between Eterna Therapeutics and Mesoblast

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

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

Diversification Opportunities for Eterna Therapeutics and Mesoblast

0.49

Correlation Coefficient

Eterna Therapeutics  Mesoblast

Very weak diversification

The 3 months correlation between Eterna and Mesoblast is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Eterna Therapeutics and Mesoblast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mesoblast and Eterna Therapeutics 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 Eterna Therapeutics are associated (or correlated) with Mesoblast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mesoblast has no effect on the direction of Eterna Therapeutics i.e., Eterna Therapeutics and Mesoblast go up and down completely randomly.

Pair Corralation between Eterna Therapeutics and Mesoblast

Given the investment horizon of 90 days Eterna Therapeutics is expected to generate 3.0 times more return on investment than Mesoblast. However, Eterna Therapeutics is 3.0 times more volatile than Mesoblast. It trades about 0.02 of its potential returns per unit of risk. Mesoblast is currently generating about -0.2 per unit of risk. If you would invest  28.00  in Eterna Therapeutics on December 29, 2024 and sell it today you would lose (5.00) from holding Eterna Therapeutics or give up 17.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

Eterna Therapeutics  vs.  Mesoblast

Eterna Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eterna Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Eterna Therapeutics may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Mesoblast

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mesoblast has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Eterna Therapeutics and Mesoblast

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

The idea behind Eterna Therapeutics and Mesoblast 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.