Correlation Between Mustang Bio and Palisade Bio

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

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

Diversification Opportunities for Mustang Bio and Palisade Bio

0.71

Correlation Coefficient

Mustang Bio  Palisade Bio

Poor diversification

The 3 months correlation between Mustang and Palisade is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Mustang Bio and Palisade Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palisade Bio 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 Palisade Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palisade Bio has no effect on the direction of Mustang Bio i.e., Mustang Bio and Palisade Bio go up and down completely randomly.

Pair Corralation between Mustang Bio and Palisade Bio

Given the investment horizon of 90 days Mustang Bio is expected to generate 3.28 times less return on investment than Palisade Bio. But when comparing it to its historical volatility, Mustang Bio is 3.17 times less risky than Palisade Bio. It trades about 0.12 of its potential returns per unit of risk. Palisade Bio is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Palisade Bio on October 9, 2024 and sell it today you would earn a total of  38.00  from holding Palisade Bio or generate 20.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.0%
Values	Daily Returns

Mustang Bio  vs.  Palisade Bio

Mustang Bio

Risk-Adjusted Performance

1 of 100

Weak

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 newest stock price disarray, may contribute to short-term losses for the investors.

Palisade Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Palisade Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's essential indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Mustang Bio and Palisade Bio

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

The idea behind Mustang Bio and Palisade 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.