Correlation Between Phathom Pharmaceuticals and Fulcrum Therapeutics

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

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

Diversification Opportunities for Phathom Pharmaceuticals and Fulcrum Therapeutics

-0.62

Correlation Coefficient

Phathom Pharmaceuticals  Fulcrum Therapeutics

Excellent diversification

The 3 months correlation between Phathom and Fulcrum is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Phathom Pharmaceuticals and Fulcrum Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fulcrum Therapeutics and Phathom Pharmaceuticals 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 Phathom Pharmaceuticals 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 Phathom Pharmaceuticals i.e., Phathom Pharmaceuticals and Fulcrum Therapeutics go up and down completely randomly.

Pair Corralation between Phathom Pharmaceuticals and Fulcrum Therapeutics

Given the investment horizon of 90 days Phathom Pharmaceuticals is expected to under-perform the Fulcrum Therapeutics. In addition to that, Phathom Pharmaceuticals is 1.33 times more volatile than Fulcrum Therapeutics. It trades about -0.2 of its total potential returns per unit of risk. Fulcrum Therapeutics is currently generating about 0.09 per unit of volatility. If you would invest  325.00  in Fulcrum Therapeutics on October 23, 2024 and sell it today you would earn a total of  71.00  from holding Fulcrum Therapeutics or generate 21.85% return on investment over 90 days.

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

Phathom Pharmaceuticals  vs.  Fulcrum Therapeutics

Phathom Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Phathom Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Fulcrum Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Fulcrum Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain essential indicators, Fulcrum Therapeutics exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Phathom Pharmaceuticals and Fulcrum Therapeutics

The main advantage of trading using opposite Phathom Pharmaceuticals and Fulcrum Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phathom Pharmaceuticals 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 Phathom Pharmaceuticals 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.