Correlation Between Fusion Pharmaceuticals and FWBI Old

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

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

Diversification Opportunities for Fusion Pharmaceuticals and FWBI Old

-0.24

Correlation Coefficient

Fusion Pharmaceuticals  FWBI Old

Very good diversification

The 3 months correlation between Fusion and FWBI is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fusion Pharmaceuticals and FWBI Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FWBI Old and Fusion Pharmaceuticals 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 Fusion Pharmaceuticals are associated (or correlated) with FWBI Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FWBI Old has no effect on the direction of Fusion Pharmaceuticals i.e., Fusion Pharmaceuticals and FWBI Old go up and down completely randomly.

Pair Corralation between Fusion Pharmaceuticals and FWBI Old

If you would invest  61.00  in FWBI Old on October 10, 2024 and sell it today you would earn a total of  0.00  from holding FWBI Old or generate 0.0% return on investment over 90 days.

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

Fusion Pharmaceuticals  vs.  FWBI Old

Fusion Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

FWBI Old

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FWBI Old has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, FWBI Old is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Fusion Pharmaceuticals and FWBI Old

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

The idea behind Fusion Pharmaceuticals and FWBI 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.