Correlation Between Karyopharm Therapeutics and Generation Bio
Can any of the company-specific risk be diversified away by investing in both Karyopharm Therapeutics and Generation Bio 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 Karyopharm Therapeutics and Generation Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Karyopharm Therapeutics and Generation Bio Co, you can compare the effects of market volatilities on Karyopharm Therapeutics and Generation Bio 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 Karyopharm Therapeutics with a short position of Generation Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Karyopharm Therapeutics and Generation Bio.
Diversification Opportunities for Karyopharm Therapeutics and Generation Bio
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Karyopharm and Generation is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Karyopharm Therapeutics and Generation Bio Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Generation Bio and Karyopharm 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 Karyopharm Therapeutics are associated (or correlated) with Generation Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Generation Bio has no effect on the direction of Karyopharm Therapeutics i.e., Karyopharm Therapeutics and Generation Bio go up and down completely randomly.
Pair Corralation between Karyopharm Therapeutics and Generation Bio
Given the investment horizon of 90 days Karyopharm Therapeutics is expected to under-perform the Generation Bio. But the stock apears to be less risky and, when comparing its historical volatility, Karyopharm Therapeutics is 2.13 times less risky than Generation Bio. The stock trades about -0.71 of its potential returns per unit of risk. The Generation Bio Co is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 140.00 in Generation Bio Co on September 26, 2024 and sell it today you would lose (30.00) from holding Generation Bio Co or give up 21.43% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Karyopharm Therapeutics vs. Generation Bio Co
Performance |
Timeline |
Karyopharm Therapeutics |
Generation Bio |
Karyopharm Therapeutics and Generation Bio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Karyopharm Therapeutics and Generation Bio
The main advantage of trading using opposite Karyopharm Therapeutics and Generation Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Karyopharm Therapeutics position performs unexpectedly, Generation Bio 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 Generation Bio will offset losses from the drop in Generation Bio's long position.Karyopharm Therapeutics vs. X4 Pharmaceuticals | Karyopharm Therapeutics vs. Hookipa Pharma | Karyopharm Therapeutics vs. Mereo BioPharma Group | Karyopharm Therapeutics vs. Acumen Pharmaceuticals |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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