Correlation Between Fate Therapeutics and Vigil Neuroscience

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

By analyzing existing cross correlation between Fate Therapeutics and Vigil Neuroscience, you can compare the effects of market volatilities on Fate Therapeutics and Vigil Neuroscience 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 Vigil Neuroscience. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fate Therapeutics and Vigil Neuroscience.

Diversification Opportunities for Fate Therapeutics and Vigil Neuroscience

-0.12

Correlation Coefficient

Fate Therapeutics  Vigil Neuroscience

Good diversification

The 3 months correlation between Fate and Vigil is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Fate Therapeutics and Vigil Neuroscience in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vigil Neuroscience 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 Vigil Neuroscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vigil Neuroscience has no effect on the direction of Fate Therapeutics i.e., Fate Therapeutics and Vigil Neuroscience go up and down completely randomly.

Pair Corralation between Fate Therapeutics and Vigil Neuroscience

Given the investment horizon of 90 days Fate Therapeutics is expected to under-perform the Vigil Neuroscience. But the stock apears to be less risky and, when comparing its historical volatility, Fate Therapeutics is 1.17 times less risky than Vigil Neuroscience. The stock trades about -0.03 of its potential returns per unit of risk. The Vigil Neuroscience is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,020  in Vigil Neuroscience on December 8, 2024 and sell it today you would lose (770.00) from holding Vigil Neuroscience or give up 75.49% of portfolio value over 90 days.

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

Fate Therapeutics  vs.  Vigil Neuroscience

Fate Therapeutics

Risk-Adjusted Performance

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 April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Vigil Neuroscience

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vigil Neuroscience are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Vigil Neuroscience disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fate Therapeutics and Vigil Neuroscience

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

The idea behind Fate Therapeutics and Vigil Neuroscience 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.