Correlation Between Fate Therapeutics and Cabaletta Bio
Can any of the company-specific risk be diversified away by investing in both Fate Therapeutics and Cabaletta 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 Fate Therapeutics and Cabaletta Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fate Therapeutics and Cabaletta Bio, you can compare the effects of market volatilities on Fate Therapeutics and Cabaletta 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 Fate Therapeutics with a short position of Cabaletta Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fate Therapeutics and Cabaletta Bio.
Diversification Opportunities for Fate Therapeutics and Cabaletta Bio
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fate and Cabaletta is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Fate Therapeutics and Cabaletta Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cabaletta Bio and Fate 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 Fate Therapeutics are associated (or correlated) with Cabaletta Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cabaletta Bio has no effect on the direction of Fate Therapeutics i.e., Fate Therapeutics and Cabaletta Bio go up and down completely randomly.
Pair Corralation between Fate Therapeutics and Cabaletta Bio
Given the investment horizon of 90 days Fate Therapeutics is expected to under-perform the Cabaletta Bio. But the stock apears to be less risky and, when comparing its historical volatility, Fate Therapeutics is 1.0 times less risky than Cabaletta Bio. The stock trades about -0.02 of its potential returns per unit of risk. The Cabaletta Bio is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 940.00 in Cabaletta Bio on September 23, 2024 and sell it today you would lose (702.00) from holding Cabaletta Bio or give up 74.68% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Fate Therapeutics vs. Cabaletta Bio
Performance |
Timeline |
Fate Therapeutics |
Cabaletta Bio |
Fate Therapeutics and Cabaletta Bio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Fate Therapeutics and Cabaletta Bio
The main advantage of trading using opposite Fate Therapeutics and Cabaletta Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fate Therapeutics position performs unexpectedly, Cabaletta 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 Cabaletta Bio will offset losses from the drop in Cabaletta Bio's long position.Fate Therapeutics vs. Atara Biotherapeutics | Fate Therapeutics vs. Sana Biotechnology | Fate Therapeutics vs. Caribou Biosciences | Fate Therapeutics vs. Arcus Biosciences |
Cabaletta Bio vs. Fate Therapeutics | Cabaletta Bio vs. Sana Biotechnology | Cabaletta Bio vs. Caribou Biosciences | Cabaletta Bio vs. Arcus Biosciences |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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