Correlation Between Magenta Therapeutics and Cardio Diagnostics

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

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

Diversification Opportunities for Magenta Therapeutics and Cardio Diagnostics

0.0

Correlation Coefficient

Magenta Therapeutics  Cardio Diagnostics

Pay attention - limited upside

The 3 months correlation between Magenta and Cardio is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Magenta Therapeutics and Cardio Diagnostics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cardio Diagnostics and Magenta Therapeutics 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 Magenta Therapeutics are associated (or correlated) with Cardio Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cardio Diagnostics has no effect on the direction of Magenta Therapeutics i.e., Magenta Therapeutics and Cardio Diagnostics go up and down completely randomly.

Pair Corralation between Magenta Therapeutics and Cardio Diagnostics

Given the investment horizon of 90 days Magenta Therapeutics is expected to generate 68.03 times less return on investment than Cardio Diagnostics. But when comparing it to its historical volatility, Magenta Therapeutics is 4.8 times less risky than Cardio Diagnostics. It trades about 0.0 of its potential returns per unit of risk. Cardio Diagnostics Holdings is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  118.00  in Cardio Diagnostics Holdings on October 25, 2024 and sell it today you would lose (63.65) from holding Cardio Diagnostics Holdings or give up 53.94% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	23.89%
Values	Daily Returns

Magenta Therapeutics  vs.  Cardio Diagnostics Holdings

Magenta Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Magenta Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Magenta Therapeutics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Cardio Diagnostics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cardio Diagnostics Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Cardio Diagnostics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magenta Therapeutics and Cardio Diagnostics

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

The idea behind Magenta Therapeutics and Cardio Diagnostics Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.