Correlation Between Ocular Therapeutix and Fulcrum Therapeutics

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

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

Diversification Opportunities for Ocular Therapeutix and Fulcrum Therapeutics

0.65

Correlation Coefficient

Ocular Therapeutix  Fulcrum Therapeutics

Poor diversification

The 3 months correlation between Ocular and Fulcrum is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ocular Therapeutix and Fulcrum Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Therapeutics and Ocular Therapeutix 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 Ocular Therapeutix are associated (or correlated) with Fulcrum Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fulcrum Therapeutics has no effect on the direction of Ocular Therapeutix i.e., Ocular Therapeutix and Fulcrum Therapeutics go up and down completely randomly.

Pair Corralation between Ocular Therapeutix and Fulcrum Therapeutics

Given the investment horizon of 90 days Ocular Therapeutix is expected to generate 1.17 times more return on investment than Fulcrum Therapeutics. However, Ocular Therapeutix is 1.17 times more volatile than Fulcrum Therapeutics. It trades about -0.03 of its potential returns per unit of risk. Fulcrum Therapeutics is currently generating about -0.19 per unit of risk. If you would invest  854.00  in Ocular Therapeutix on December 26, 2024 and sell it today you would lose (101.00) from holding Ocular Therapeutix or give up 11.83% of portfolio value over 90 days.

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

Ocular Therapeutix  vs.  Fulcrum Therapeutics

Ocular Therapeutix

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ocular Therapeutix has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Fulcrum Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fulcrum Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Ocular Therapeutix and Fulcrum Therapeutics

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

The idea behind Ocular Therapeutix and Fulcrum 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.

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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .