Correlation Between Mustang Bio and Denali Therapeutics
Can any of the company-specific risk be diversified away by investing in both Mustang Bio and Denali 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 Mustang Bio and Denali Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mustang Bio and Denali Therapeutics, you can compare the effects of market volatilities on Mustang Bio and Denali 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 Mustang Bio with a short position of Denali Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mustang Bio and Denali Therapeutics.
Diversification Opportunities for Mustang Bio and Denali Therapeutics
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Mustang and Denali is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and Denali Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denali Therapeutics 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 Denali Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denali Therapeutics has no effect on the direction of Mustang Bio i.e., Mustang Bio and Denali Therapeutics go up and down completely randomly.
Pair Corralation between Mustang Bio and Denali Therapeutics
Given the investment horizon of 90 days Mustang Bio is expected to under-perform the Denali Therapeutics. In addition to that, Mustang Bio is 1.72 times more volatile than Denali Therapeutics. It trades about -0.08 of its total potential returns per unit of risk. Denali Therapeutics is currently generating about -0.02 per unit of volatility. If you would invest 2,559 in Denali Therapeutics on September 7, 2024 and sell it today you would lose (227.00) from holding Denali Therapeutics or give up 8.87% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Mustang Bio vs. Denali Therapeutics
Performance |
Timeline |
Mustang Bio |
Denali Therapeutics |
Mustang Bio and Denali Therapeutics Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mustang Bio and Denali Therapeutics
The main advantage of trading using opposite Mustang Bio and Denali Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mustang Bio position performs unexpectedly, Denali 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 Denali Therapeutics will offset losses from the drop in Denali Therapeutics' 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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