Correlation Between Magenta Therapeutics and Pulmatrix

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

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

Diversification Opportunities for Magenta Therapeutics and Pulmatrix

0.56

Correlation Coefficient

Magenta Therapeutics  Pulmatrix

Very weak diversification

The 3 months correlation between Magenta and Pulmatrix is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Magenta Therapeutics and Pulmatrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmatrix 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 Pulmatrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmatrix has no effect on the direction of Magenta Therapeutics i.e., Magenta Therapeutics and Pulmatrix go up and down completely randomly.

Pair Corralation between Magenta Therapeutics and Pulmatrix

If you would invest  208.00  in Pulmatrix on September 3, 2024 and sell it today you would earn a total of  456.00  from holding Pulmatrix or generate 219.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Magenta Therapeutics  vs.  Pulmatrix

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.

Pulmatrix

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmatrix are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady essential indicators, Pulmatrix displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Magenta Therapeutics and Pulmatrix

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

The idea behind Magenta Therapeutics and Pulmatrix 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.