Correlation Between Mustang Bio and Cardiff Oncology

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

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

Diversification Opportunities for Mustang Bio and Cardiff Oncology

0.18

Correlation Coefficient

Mustang Bio  Cardiff Oncology

Average diversification

The 3 months correlation between Mustang and Cardiff is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and Cardiff Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardiff Oncology 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 Cardiff Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardiff Oncology has no effect on the direction of Mustang Bio i.e., Mustang Bio and Cardiff Oncology go up and down completely randomly.

Pair Corralation between Mustang Bio and Cardiff Oncology

Given the investment horizon of 90 days Mustang Bio is expected to under-perform the Cardiff Oncology. In addition to that, Mustang Bio is 1.05 times more volatile than Cardiff Oncology. It trades about -0.07 of its total potential returns per unit of risk. Cardiff Oncology is currently generating about 0.07 per unit of volatility. If you would invest  211.00  in Cardiff Oncology on September 6, 2024 and sell it today you would earn a total of  30.00  from holding Cardiff Oncology or generate 14.22% return on investment over 90 days.

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

Mustang Bio  vs.  Cardiff Oncology

Mustang Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mustang Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cardiff Oncology

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cardiff Oncology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent fundamental indicators, Cardiff Oncology reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mustang Bio and Cardiff Oncology

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

The idea behind Mustang Bio and Cardiff Oncology 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.