Correlation Between Freedom Bank and Sellas Life

Can any of the company-specific risk be diversified away by investing in both Freedom Bank and Sellas Life 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 Freedom Bank and Sellas Life into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Freedom Bank of and Sellas Life Sciences, you can compare the effects of market volatilities on Freedom Bank and Sellas Life 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 Freedom Bank with a short position of Sellas Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Bank and Sellas Life.

Diversification Opportunities for Freedom Bank and Sellas Life

-0.01

Correlation Coefficient

Freedom Bank  Sellas Life

Good diversification

The 3 months correlation between Freedom and Sellas is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Bank of and Sellas Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sellas Life Sciences and Freedom Bank 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 Freedom Bank of are associated (or correlated) with Sellas Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sellas Life Sciences has no effect on the direction of Freedom Bank i.e., Freedom Bank and Sellas Life go up and down completely randomly.

Pair Corralation between Freedom Bank and Sellas Life

Given the investment horizon of 90 days Freedom Bank of is expected to generate 0.28 times more return on investment than Sellas Life. However, Freedom Bank of is 3.54 times less risky than Sellas Life. It trades about 0.07 of its potential returns per unit of risk. Sellas Life Sciences is currently generating about -0.04 per unit of risk. If you would invest  975.00  in Freedom Bank of on September 23, 2024 and sell it today you would earn a total of  85.00  from holding Freedom Bank of or generate 8.72% return on investment over 90 days.

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

Freedom Bank of  vs.  Sellas Life Sciences

Freedom Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Freedom Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Sellas Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sellas Life Sciences 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 comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Freedom Bank and Sellas Life

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

The idea behind Freedom Bank of and Sellas Life Sciences 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.