Correlation Between Spyre Therapeutics and Primo Brands

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

By analyzing existing cross correlation between Spyre Therapeutics and Primo Brands, you can compare the effects of market volatilities on Spyre Therapeutics and Primo Brands 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 Primo Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spyre Therapeutics and Primo Brands.

Diversification Opportunities for Spyre Therapeutics and Primo Brands

-0.69

Correlation Coefficient

Spyre Therapeutics  Primo Brands

Excellent diversification

The 3 months correlation between Spyre and Primo is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Spyre Therapeutics and Primo Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Primo Brands 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 Primo Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Primo Brands has no effect on the direction of Spyre Therapeutics i.e., Spyre Therapeutics and Primo Brands go up and down completely randomly.

Pair Corralation between Spyre Therapeutics and Primo Brands

Given the investment horizon of 90 days Spyre Therapeutics is expected to generate 9.69 times more return on investment than Primo Brands. However, Spyre Therapeutics is 9.69 times more volatile than Primo Brands. It trades about 0.04 of its potential returns per unit of risk. Primo Brands is currently generating about 0.1 per unit of risk. If you would invest  1,300  in Spyre Therapeutics on October 5, 2024 and sell it today you would earn a total of  1,138  from holding Spyre Therapeutics or generate 87.5% return on investment over 90 days.

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

Spyre Therapeutics  vs.  Primo Brands

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 latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Primo Brands

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Primo Brands are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating primary indicators, Primo Brands sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Spyre Therapeutics and Primo Brands

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

The idea behind Spyre Therapeutics and Primo Brands 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.