Correlation Between Passage Bio and Shattuck Labs

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

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

Diversification Opportunities for Passage Bio and Shattuck Labs

-0.13

Correlation Coefficient

Passage Bio  Shattuck Labs

Good diversification

The 3 months correlation between Passage and Shattuck is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Passage Bio and Shattuck Labs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shattuck Labs and Passage Bio 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 Passage Bio are associated (or correlated) with Shattuck Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shattuck Labs has no effect on the direction of Passage Bio i.e., Passage Bio and Shattuck Labs go up and down completely randomly.

Pair Corralation between Passage Bio and Shattuck Labs

Given the investment horizon of 90 days Passage Bio is expected to under-perform the Shattuck Labs. In addition to that, Passage Bio is 1.09 times more volatile than Shattuck Labs. It trades about -0.08 of its total potential returns per unit of risk. Shattuck Labs is currently generating about 0.01 per unit of volatility. If you would invest  117.00  in Shattuck Labs on December 29, 2024 and sell it today you would lose (11.00) from holding Shattuck Labs or give up 9.4% of portfolio value over 90 days.

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

Passage Bio  vs.  Shattuck Labs

Passage Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Passage Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Shattuck Labs

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shattuck Labs are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Shattuck Labs is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Passage Bio and Shattuck Labs

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

The idea behind Passage Bio and Shattuck Labs 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.