Correlation Between Spyre Therapeutics and Melrose Industries

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Can any of the company-specific risk be diversified away by investing in both Spyre Therapeutics and Melrose Industries 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 Melrose Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spyre Therapeutics and Melrose Industries PLC, you can compare the effects of market volatilities on Spyre Therapeutics and Melrose Industries 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 Melrose Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spyre Therapeutics and Melrose Industries.

Diversification Opportunities for Spyre Therapeutics and Melrose Industries

-0.64
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Spyre and Melrose is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Spyre Therapeutics and Melrose Industries PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melrose Industries PLC 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 Melrose Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melrose Industries PLC has no effect on the direction of Spyre Therapeutics i.e., Spyre Therapeutics and Melrose Industries go up and down completely randomly.

Pair Corralation between Spyre Therapeutics and Melrose Industries

Given the investment horizon of 90 days Spyre Therapeutics is expected to under-perform the Melrose Industries. In addition to that, Spyre Therapeutics is 1.02 times more volatile than Melrose Industries PLC. It trades about -0.16 of its total potential returns per unit of risk. Melrose Industries PLC is currently generating about 0.12 per unit of volatility. If you would invest  605.00  in Melrose Industries PLC on October 24, 2024 and sell it today you would earn a total of  161.00  from holding Melrose Industries PLC or generate 26.61% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Spyre Therapeutics  vs.  Melrose Industries PLC

 Performance 
       Timeline  
Spyre Therapeutics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Melrose Industries PLC 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Melrose Industries PLC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Melrose Industries reported solid returns over the last few months and may actually be approaching a breakup point.

Spyre Therapeutics and Melrose Industries Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Spyre Therapeutics and Melrose Industries

The main advantage of trading using opposite Spyre Therapeutics and Melrose Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spyre Therapeutics position performs unexpectedly, Melrose Industries 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 Melrose Industries will offset losses from the drop in Melrose Industries' long position.
The idea behind Spyre Therapeutics and Melrose Industries PLC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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