Correlation Between NGM Biopharmaceutica and Generation Bio

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

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

Diversification Opportunities for NGM Biopharmaceutica and Generation Bio

0.0

Correlation Coefficient

NGM Biopharmaceutica  Generation Bio

Pay attention - limited upside

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

Pair Corralation between NGM Biopharmaceutica and Generation Bio

If you would invest (100.00) in NGM Biopharmaceuticals on November 19, 2024 and sell it today you would earn a total of  100.00  from holding NGM Biopharmaceuticals or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NGM Biopharmaceuticals  vs.  Generation Bio Co

NGM Biopharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days NGM Biopharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, NGM Biopharmaceutica is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Generation Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Generation Bio Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in March 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with NGM Biopharmaceutica and Generation Bio

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

The idea behind NGM Biopharmaceuticals and Generation Bio Co 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.