Correlation Between Mind Medicine and Capricor Therapeutics

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

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

Diversification Opportunities for Mind Medicine and Capricor Therapeutics

0.26

Correlation Coefficient

Mind Medicine  Capricor Therapeutics

Modest diversification

The 3 months correlation between Mind and Capricor is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Mind Medicine and Capricor Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricor Therapeutics and Mind Medicine 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 Mind Medicine are associated (or correlated) with Capricor Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricor Therapeutics has no effect on the direction of Mind Medicine i.e., Mind Medicine and Capricor Therapeutics go up and down completely randomly.

Pair Corralation between Mind Medicine and Capricor Therapeutics

Given the investment horizon of 90 days Mind Medicine is expected to generate 0.67 times more return on investment than Capricor Therapeutics. However, Mind Medicine is 1.49 times less risky than Capricor Therapeutics. It trades about -0.15 of its potential returns per unit of risk. Capricor Therapeutics is currently generating about -0.15 per unit of risk. If you would invest  897.00  in Mind Medicine on September 12, 2024 and sell it today you would lose (166.00) from holding Mind Medicine or give up 18.51% of portfolio value over 90 days.

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

Mind Medicine  vs.  Capricor Therapeutics

Mind Medicine

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Mind Medicine are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating primary indicators, Mind Medicine exhibited solid returns over the last few months and may actually be approaching a breakup point.

Capricor Therapeutics

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Capricor Therapeutics are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Capricor Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mind Medicine and Capricor Therapeutics

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

The idea behind Mind Medicine and Capricor Therapeutics 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.