Correlation Between Spyre Therapeutics and First Community

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

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

Diversification Opportunities for Spyre Therapeutics and First Community

0.04

Correlation Coefficient

Spyre Therapeutics  First Community

Significant diversification

The 3 months correlation between Spyre and First is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Spyre Therapeutics and First Community Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Community Banc and Spyre Therapeutics 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 Spyre Therapeutics are associated (or correlated) with First Community. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Community Banc has no effect on the direction of Spyre Therapeutics i.e., Spyre Therapeutics and First Community go up and down completely randomly.

Pair Corralation between Spyre Therapeutics and First Community

Given the investment horizon of 90 days Spyre Therapeutics is expected to under-perform the First Community. In addition to that, Spyre Therapeutics is 2.14 times more volatile than First Community Bancshares. It trades about -0.13 of its total potential returns per unit of risk. First Community Bancshares is currently generating about -0.18 per unit of volatility. If you would invest  4,576  in First Community Bancshares on September 22, 2024 and sell it today you would lose (335.00) from holding First Community Bancshares or give up 7.32% of portfolio value over 90 days.

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

Spyre Therapeutics  vs.  First Community Bancshares

Spyre Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

First Community Banc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Community Bancshares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, First Community is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Spyre Therapeutics and First Community

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

The idea behind Spyre Therapeutics and First Community Bancshares 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.