Correlation Between Lifecore Biomedical and Mustang Bio

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

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

Diversification Opportunities for Lifecore Biomedical and Mustang Bio

-0.6

Correlation Coefficient

Lifecore Biomedical  Mustang Bio

Excellent diversification

The 3 months correlation between Lifecore and Mustang is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Lifecore Biomedical and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio and Lifecore Biomedical 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 Lifecore Biomedical are associated (or correlated) with Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of Lifecore Biomedical i.e., Lifecore Biomedical and Mustang Bio go up and down completely randomly.

Pair Corralation between Lifecore Biomedical and Mustang Bio

Given the investment horizon of 90 days Lifecore Biomedical is expected to generate 0.31 times more return on investment than Mustang Bio. However, Lifecore Biomedical is 3.21 times less risky than Mustang Bio. It trades about 0.04 of its potential returns per unit of risk. Mustang Bio is currently generating about 0.01 per unit of risk. If you would invest  693.00  in Lifecore Biomedical on October 9, 2024 and sell it today you would lose (6.00) from holding Lifecore Biomedical or give up 0.87% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

Lifecore Biomedical  vs.  Mustang Bio

Lifecore Biomedical

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Lifecore Biomedical are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Lifecore Biomedical reported solid returns over the last few months and may actually be approaching a breakup point.

Mustang Bio

Risk-Adjusted Performance

1 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mustang Bio are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Mustang Bio is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Lifecore Biomedical and Mustang Bio

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

The idea behind Lifecore Biomedical and Mustang Bio 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.