Correlation Between PepGen and Werewolf Therapeutics

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

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

Diversification Opportunities for PepGen and Werewolf Therapeutics

0.44

Correlation Coefficient

PepGen  Werewolf Therapeutics

Very weak diversification

The 3 months correlation between PepGen and Werewolf is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding PepGen and Werewolf Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Werewolf Therapeutics and PepGen 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 PepGen are associated (or correlated) with Werewolf Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Werewolf Therapeutics has no effect on the direction of PepGen i.e., PepGen and Werewolf Therapeutics go up and down completely randomly.

Pair Corralation between PepGen and Werewolf Therapeutics

Given the investment horizon of 90 days PepGen is expected to under-perform the Werewolf Therapeutics. In addition to that, PepGen is 3.8 times more volatile than Werewolf Therapeutics. It trades about -0.04 of its total potential returns per unit of risk. Werewolf Therapeutics is currently generating about -0.12 per unit of volatility. If you would invest  148.00  in Werewolf Therapeutics on December 29, 2024 and sell it today you would lose (41.00) from holding Werewolf Therapeutics or give up 27.7% of portfolio value over 90 days.

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

PepGen  vs.  Werewolf Therapeutics

PepGen

Risk-Adjusted Performance

Very Weak

Over the last 90 days PepGen 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.

Werewolf Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Werewolf Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with PepGen and Werewolf Therapeutics

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

The idea behind PepGen and Werewolf 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.