Correlation Between Marvell Technology and CRISPR Therapeutics

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

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

Diversification Opportunities for Marvell Technology and CRISPR Therapeutics

-0.23

Correlation Coefficient

Marvell Technology  CRISPR Therapeutics

Very good diversification

The 3 months correlation between Marvell and CRISPR is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Marvell Technology and CRISPR Therapeutics AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRISPR Therapeutics and Marvell Technology 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 Marvell Technology are associated (or correlated) with CRISPR Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRISPR Therapeutics has no effect on the direction of Marvell Technology i.e., Marvell Technology and CRISPR Therapeutics go up and down completely randomly.

Pair Corralation between Marvell Technology and CRISPR Therapeutics

Assuming the 90 days trading horizon Marvell Technology is expected to generate 0.56 times more return on investment than CRISPR Therapeutics. However, Marvell Technology is 1.78 times less risky than CRISPR Therapeutics. It trades about 0.19 of its potential returns per unit of risk. CRISPR Therapeutics AG is currently generating about -0.01 per unit of risk. If you would invest  7,075  in Marvell Technology on October 22, 2024 and sell it today you would earn a total of  525.00  from holding Marvell Technology or generate 7.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Marvell Technology  vs.  CRISPR Therapeutics AG

Marvell Technology

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Marvell Technology are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Marvell Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

CRISPR Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CRISPR Therapeutics AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Marvell Technology and CRISPR Therapeutics

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

The idea behind Marvell Technology and CRISPR Therapeutics AG 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.