Correlation Between Unity Biotechnology and Regenxbio

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

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

Diversification Opportunities for Unity Biotechnology and Regenxbio

0.09

Correlation Coefficient

Unity Biotechnology  Regenxbio

Significant diversification

The 3 months correlation between Unity and Regenxbio is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Unity Biotechnology and Regenxbio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regenxbio and Unity Biotechnology 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 Unity Biotechnology are associated (or correlated) with Regenxbio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regenxbio has no effect on the direction of Unity Biotechnology i.e., Unity Biotechnology and Regenxbio go up and down completely randomly.

Pair Corralation between Unity Biotechnology and Regenxbio

Considering the 90-day investment horizon Unity Biotechnology is expected to generate 2.42 times more return on investment than Regenxbio. However, Unity Biotechnology is 2.42 times more volatile than Regenxbio. It trades about 0.08 of its potential returns per unit of risk. Regenxbio is currently generating about 0.05 per unit of risk. If you would invest  96.00  in Unity Biotechnology on December 29, 2024 and sell it today you would earn a total of  22.00  from holding Unity Biotechnology or generate 22.92% return on investment over 90 days.

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

Unity Biotechnology  vs.  Regenxbio

Unity Biotechnology

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Unity Biotechnology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent fundamental drivers, Unity Biotechnology showed solid returns over the last few months and may actually be approaching a breakup point.

Regenxbio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Regenxbio are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Regenxbio showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Unity Biotechnology and Regenxbio

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

The idea behind Unity Biotechnology and Regenxbio 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.