Correlation Between Tectonic Therapeutic, and Caribou Biosciences

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

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

Diversification Opportunities for Tectonic Therapeutic, and Caribou Biosciences

0.38

Correlation Coefficient

Tectonic Therapeutic,  Caribou Biosciences

Weak diversification

The 3 months correlation between Tectonic and Caribou is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Tectonic Therapeutic, and Caribou Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribou Biosciences and Tectonic Therapeutic, 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 Tectonic Therapeutic, are associated (or correlated) with Caribou Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribou Biosciences has no effect on the direction of Tectonic Therapeutic, i.e., Tectonic Therapeutic, and Caribou Biosciences go up and down completely randomly.

Pair Corralation between Tectonic Therapeutic, and Caribou Biosciences

Given the investment horizon of 90 days Tectonic Therapeutic, is expected to generate 0.8 times more return on investment than Caribou Biosciences. However, Tectonic Therapeutic, is 1.26 times less risky than Caribou Biosciences. It trades about 0.08 of its potential returns per unit of risk. Caribou Biosciences is currently generating about -0.15 per unit of risk. If you would invest  4,804  in Tectonic Therapeutic, on September 26, 2024 and sell it today you would earn a total of  252.00  from holding Tectonic Therapeutic, or generate 5.25% return on investment over 90 days.

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

Tectonic Therapeutic,  vs.  Caribou Biosciences

Tectonic Therapeutic,

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tectonic Therapeutic, are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, Tectonic Therapeutic, showed solid returns over the last few months and may actually be approaching a breakup point.

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Tectonic Therapeutic, and Caribou Biosciences

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

The idea behind Tectonic Therapeutic, and Caribou Biosciences 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 Transaction History module to view history of all your transactions and understand their impact on performance.