Correlation Between Eyepoint Pharmaceuticals and Mustang Bio

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

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

Diversification Opportunities for Eyepoint Pharmaceuticals and Mustang Bio

0.78

Correlation Coefficient

Eyepoint Pharmaceuticals  Mustang Bio

Poor diversification

The 3 months correlation between Eyepoint and Mustang is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Eyepoint Pharmaceuticals and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio and Eyepoint Pharmaceuticals 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 Eyepoint Pharmaceuticals are associated (or correlated) with Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of Eyepoint Pharmaceuticals i.e., Eyepoint Pharmaceuticals and Mustang Bio go up and down completely randomly.

Pair Corralation between Eyepoint Pharmaceuticals and Mustang Bio

Given the investment horizon of 90 days Eyepoint Pharmaceuticals is expected to generate 1.82 times less return on investment than Mustang Bio. In addition to that, Eyepoint Pharmaceuticals is 1.01 times more volatile than Mustang Bio. It trades about 0.02 of its total potential returns per unit of risk. Mustang Bio is currently generating about 0.04 per unit of volatility. If you would invest  21.00  in Mustang Bio on October 8, 2024 and sell it today you would earn a total of  1.00  from holding Mustang Bio or generate 4.76% return on investment over 90 days.

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

Eyepoint Pharmaceuticals  vs.  Mustang Bio

Eyepoint Pharmaceuticals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eyepoint Pharmaceuticals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Eyepoint Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Mustang Bio

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mustang Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward indicators, Mustang Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eyepoint Pharmaceuticals and Mustang Bio

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

The idea behind Eyepoint Pharmaceuticals and Mustang Bio 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.