Correlation Between Mustang Bio and BridgeBio Pharma
Can any of the company-specific risk be diversified away by investing in both Mustang Bio and BridgeBio Pharma 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 Mustang Bio and BridgeBio Pharma into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mustang Bio and BridgeBio Pharma, you can compare the effects of market volatilities on Mustang Bio and BridgeBio Pharma 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 Mustang Bio with a short position of BridgeBio Pharma. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustang Bio and BridgeBio Pharma.
Diversification Opportunities for Mustang Bio and BridgeBio Pharma
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Mustang and BridgeBio is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and BridgeBio Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BridgeBio Pharma and Mustang Bio 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 Mustang Bio are associated (or correlated) with BridgeBio Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BridgeBio Pharma has no effect on the direction of Mustang Bio i.e., Mustang Bio and BridgeBio Pharma go up and down completely randomly.
Pair Corralation between Mustang Bio and BridgeBio Pharma
Given the investment horizon of 90 days Mustang Bio is expected to under-perform the BridgeBio Pharma. In addition to that, Mustang Bio is 1.72 times more volatile than BridgeBio Pharma. It trades about -0.07 of its total potential returns per unit of risk. BridgeBio Pharma is currently generating about -0.04 per unit of volatility. If you would invest 3,070 in BridgeBio Pharma on September 6, 2024 and sell it today you would lose (360.00) from holding BridgeBio Pharma or give up 11.73% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Mustang Bio vs. BridgeBio Pharma
Performance |
Timeline |
Mustang Bio |
BridgeBio Pharma |
Mustang Bio and BridgeBio Pharma Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mustang Bio and BridgeBio Pharma
The main advantage of trading using opposite Mustang Bio and BridgeBio Pharma positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mustang Bio position performs unexpectedly, BridgeBio Pharma 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 BridgeBio Pharma will offset losses from the drop in BridgeBio Pharma's long position.Mustang Bio vs. Checkpoint Therapeutics | Mustang Bio vs. Reviva Pharmaceuticals Holdings | Mustang Bio vs. Fortress Biotech Pref | Mustang Bio vs. Kodiak Sciences |
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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 Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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