Correlation Between Werewolf Therapeutics and RAPT Therapeutics

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

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

Diversification Opportunities for Werewolf Therapeutics and RAPT Therapeutics

0.34

Correlation Coefficient

Werewolf Therapeutics  RAPT Therapeutics

Weak diversification

The 3 months correlation between Werewolf and RAPT is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Werewolf Therapeutics and RAPT Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RAPT Therapeutics and Werewolf 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 Werewolf Therapeutics are associated (or correlated) with RAPT Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RAPT Therapeutics has no effect on the direction of Werewolf Therapeutics i.e., Werewolf Therapeutics and RAPT Therapeutics go up and down completely randomly.

Pair Corralation between Werewolf Therapeutics and RAPT Therapeutics

Given the investment horizon of 90 days Werewolf Therapeutics is expected to generate 0.91 times more return on investment than RAPT Therapeutics. However, Werewolf Therapeutics is 1.1 times less risky than RAPT Therapeutics. It trades about 0.03 of its potential returns per unit of risk. RAPT Therapeutics is currently generating about -0.04 per unit of risk. If you would invest  205.00  in Werewolf Therapeutics on September 2, 2024 and sell it today you would lose (5.00) from holding Werewolf Therapeutics or give up 2.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Werewolf Therapeutics  vs.  RAPT Therapeutics

Werewolf Therapeutics

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Werewolf Therapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, Werewolf Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

RAPT Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RAPT 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 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 Werewolf Therapeutics and RAPT Therapeutics

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

The idea behind Werewolf Therapeutics and RAPT Therapeutics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.