Correlation Between Edgewise Therapeutics and Longeveron LLC

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

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

Diversification Opportunities for Edgewise Therapeutics and Longeveron LLC

0.69

Correlation Coefficient

Edgewise Therapeutics  Longeveron LLC

Poor diversification

The 3 months correlation between Edgewise and Longeveron is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Edgewise Therapeutics and Longeveron LLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longeveron LLC and Edgewise 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 Edgewise Therapeutics are associated (or correlated) with Longeveron LLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longeveron LLC has no effect on the direction of Edgewise Therapeutics i.e., Edgewise Therapeutics and Longeveron LLC go up and down completely randomly.

Pair Corralation between Edgewise Therapeutics and Longeveron LLC

Given the investment horizon of 90 days Edgewise Therapeutics is expected to generate 0.5 times more return on investment than Longeveron LLC. However, Edgewise Therapeutics is 1.98 times less risky than Longeveron LLC. It trades about 0.1 of its potential returns per unit of risk. Longeveron LLC is currently generating about -0.02 per unit of risk. If you would invest  685.00  in Edgewise Therapeutics on October 5, 2024 and sell it today you would earn a total of  2,087  from holding Edgewise Therapeutics or generate 304.67% return on investment over 90 days.

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

Edgewise Therapeutics  vs.  Longeveron LLC

Edgewise Therapeutics

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Edgewise Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Edgewise Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Longeveron LLC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Longeveron LLC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Longeveron LLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Edgewise Therapeutics and Longeveron LLC

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

The idea behind Edgewise Therapeutics and Longeveron LLC 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.