Correlation Between Evelo Biosciences and Monopar Therapeutics

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

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

Diversification Opportunities for Evelo Biosciences and Monopar Therapeutics

0.34

Correlation Coefficient

Evelo Biosciences  Monopar Therapeutics

Weak diversification

The 3 months correlation between Evelo and Monopar is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Evelo Biosciences and Monopar Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monopar Therapeutics and Evelo 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 Evelo Biosciences are associated (or correlated) with Monopar Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monopar Therapeutics has no effect on the direction of Evelo Biosciences i.e., Evelo Biosciences and Monopar Therapeutics go up and down completely randomly.

Pair Corralation between Evelo Biosciences and Monopar Therapeutics

If you would invest  371.00  in Monopar Therapeutics on September 29, 2024 and sell it today you would earn a total of  2,082  from holding Monopar Therapeutics or generate 561.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.79%
Values	Daily Returns

Evelo Biosciences  vs.  Monopar Therapeutics

Evelo Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

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

Monopar Therapeutics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Evelo Biosciences and Monopar Therapeutics

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

The idea behind Evelo Biosciences and Monopar 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.