Correlation Between Freeline Therapeutics and AVRO Old

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

By analyzing existing cross correlation between Freeline Therapeutics Holdings and AVRO Old, you can compare the effects of market volatilities on Freeline Therapeutics and AVRO Old 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 Freeline Therapeutics with a short position of AVRO Old. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freeline Therapeutics and AVRO Old.

Diversification Opportunities for Freeline Therapeutics and AVRO Old

0.12

Correlation Coefficient

Freeline Therapeutics  AVRO Old

Average diversification

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

Pair Corralation between Freeline Therapeutics and AVRO Old

Given the investment horizon of 90 days Freeline Therapeutics Holdings is expected to under-perform the AVRO Old. In addition to that, Freeline Therapeutics is 1.05 times more volatile than AVRO Old. It trades about -0.03 of its total potential returns per unit of risk. AVRO Old is currently generating about 0.05 per unit of volatility. If you would invest  93.00  in AVRO Old on October 25, 2024 and sell it today you would earn a total of  47.00  from holding AVRO Old or generate 50.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	34.01%
Values	Daily Returns

Freeline Therapeutics Holdings  vs.  AVRO Old

Freeline Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freeline Therapeutics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Freeline Therapeutics is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

AVRO Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AVRO Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, AVRO Old is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Freeline Therapeutics and AVRO Old

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

The idea behind Freeline Therapeutics Holdings and AVRO Old 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.