Correlation Between Fulcrum Therapeutics and 50247WAB3

Can any of the company-specific risk be diversified away by investing in both Fulcrum Therapeutics and 50247WAB3 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 Fulcrum Therapeutics and 50247WAB3 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fulcrum Therapeutics and LYB INTL FIN, you can compare the effects of market volatilities on Fulcrum Therapeutics and 50247WAB3 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 Fulcrum Therapeutics with a short position of 50247WAB3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fulcrum Therapeutics and 50247WAB3.

Diversification Opportunities for Fulcrum Therapeutics and 50247WAB3

0.15

Correlation Coefficient

Fulcrum Therapeutics  50247WAB3

Average diversification

The 3 months correlation between Fulcrum and 50247WAB3 is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Fulcrum Therapeutics and LYB INTL FIN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LYB INTL FIN and Fulcrum 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 Fulcrum Therapeutics are associated (or correlated) with 50247WAB3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LYB INTL FIN has no effect on the direction of Fulcrum Therapeutics i.e., Fulcrum Therapeutics and 50247WAB3 go up and down completely randomly.

Pair Corralation between Fulcrum Therapeutics and 50247WAB3

Given the investment horizon of 90 days Fulcrum Therapeutics is expected to generate 22.86 times more return on investment than 50247WAB3. However, Fulcrum Therapeutics is 22.86 times more volatile than LYB INTL FIN. It trades about 0.03 of its potential returns per unit of risk. LYB INTL FIN is currently generating about -0.05 per unit of risk. If you would invest  653.00  in Fulcrum Therapeutics on October 7, 2024 and sell it today you would lose (145.00) from holding Fulcrum Therapeutics or give up 22.21% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	79.37%
Values	Daily Returns

Fulcrum Therapeutics  vs.  LYB INTL FIN

Fulcrum Therapeutics

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fulcrum Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Fulcrum Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

LYB INTL FIN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days LYB INTL FIN has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 50247WAB3 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Fulcrum Therapeutics and 50247WAB3

The main advantage of trading using opposite Fulcrum Therapeutics and 50247WAB3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fulcrum Therapeutics position performs unexpectedly, 50247WAB3 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 50247WAB3 will offset losses from the drop in 50247WAB3's long position.

The idea behind Fulcrum Therapeutics and LYB INTL FIN 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.