Correlation Between Fate Therapeutics and Prelude Therapeutics

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Fate Therapeutics and Prelude 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 Fate Therapeutics and Prelude Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fate Therapeutics and Prelude Therapeutics, you can compare the effects of market volatilities on Fate Therapeutics and Prelude 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 Fate Therapeutics with a short position of Prelude Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fate Therapeutics and Prelude Therapeutics.

Diversification Opportunities for Fate Therapeutics and Prelude Therapeutics

0.87
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Fate and Prelude is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Fate Therapeutics and Prelude Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prelude Therapeutics 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 Prelude Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prelude Therapeutics has no effect on the direction of Fate Therapeutics i.e., Fate Therapeutics and Prelude Therapeutics go up and down completely randomly.

Pair Corralation between Fate Therapeutics and Prelude Therapeutics

Given the investment horizon of 90 days Fate Therapeutics is expected to generate 0.78 times more return on investment than Prelude Therapeutics. However, Fate Therapeutics is 1.29 times less risky than Prelude Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Prelude Therapeutics is currently generating about -0.01 per unit of risk. If you would invest  253.00  in Fate Therapeutics on September 23, 2024 and sell it today you would lose (85.00) from holding Fate Therapeutics or give up 33.6% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Fate Therapeutics  vs.  Prelude Therapeutics

 Performance 
       Timeline  
Fate Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Fate Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Prelude Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Prelude Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Fate Therapeutics and Prelude Therapeutics Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Fate Therapeutics and Prelude Therapeutics

The main advantage of trading using opposite Fate Therapeutics and Prelude Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fate Therapeutics position performs unexpectedly, Prelude 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 Prelude Therapeutics will offset losses from the drop in Prelude Therapeutics' long position.
The idea behind Fate Therapeutics and Prelude 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.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.

Other Complementary Tools

Price Exposure Probability
Analyze equity upside and downside potential for a given time horizon across multiple markets
Portfolio Optimization
Compute new portfolio that will generate highest expected return given your specified tolerance for risk
Share Portfolio
Track or share privately all of your investments from the convenience of any device
Options Analysis
Analyze and evaluate options and option chains as a potential hedge for your portfolios
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like