Correlation Between SIMON and Tarsus Pharmaceuticals

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

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

Diversification Opportunities for SIMON and Tarsus Pharmaceuticals

0.08

Correlation Coefficient

SIMON  Tarsus Pharmaceuticals

Significant diversification

The 3 months correlation between SIMON and Tarsus is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding SIMON PPTY GROUP and Tarsus Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tarsus Pharmaceuticals and SIMON 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 SIMON PPTY GROUP are associated (or correlated) with Tarsus Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tarsus Pharmaceuticals has no effect on the direction of SIMON i.e., SIMON and Tarsus Pharmaceuticals go up and down completely randomly.

Pair Corralation between SIMON and Tarsus Pharmaceuticals

Assuming the 90 days trading horizon SIMON PPTY GROUP is expected to generate 0.19 times more return on investment than Tarsus Pharmaceuticals. However, SIMON PPTY GROUP is 5.16 times less risky than Tarsus Pharmaceuticals. It trades about -0.13 of its potential returns per unit of risk. Tarsus Pharmaceuticals is currently generating about -0.06 per unit of risk. If you would invest  9,732  in SIMON PPTY GROUP on December 4, 2024 and sell it today you would lose (459.00) from holding SIMON PPTY GROUP or give up 4.72% of portfolio value over 90 days.

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

SIMON PPTY GROUP  vs.  Tarsus Pharmaceuticals

SIMON PPTY GROUP

Risk-Adjusted Performance

Very Weak

Over the last 90 days SIMON PPTY GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SIMON is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tarsus Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tarsus Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with SIMON and Tarsus Pharmaceuticals

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

The idea behind SIMON PPTY GROUP and Tarsus Pharmaceuticals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.