Correlation Between Vericel Corp and Allogene Therapeutics

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

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

Diversification Opportunities for Vericel Corp and Allogene Therapeutics

-0.57

Correlation Coefficient

Vericel Corp  Allogene Therapeutics

Excellent diversification

The 3 months correlation between Vericel and Allogene is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Vericel Corp Ord and Allogene Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allogene Therapeutics and Vericel Corp 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 Vericel Corp Ord are associated (or correlated) with Allogene Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allogene Therapeutics has no effect on the direction of Vericel Corp i.e., Vericel Corp and Allogene Therapeutics go up and down completely randomly.

Pair Corralation between Vericel Corp and Allogene Therapeutics

Given the investment horizon of 90 days Vericel Corp Ord is expected to generate 0.33 times more return on investment than Allogene Therapeutics. However, Vericel Corp Ord is 3.04 times less risky than Allogene Therapeutics. It trades about 0.0 of its potential returns per unit of risk. Allogene Therapeutics is currently generating about -0.1 per unit of risk. If you would invest  5,671  in Vericel Corp Ord on September 22, 2024 and sell it today you would lose (21.00) from holding Vericel Corp Ord or give up 0.37% of portfolio value over 90 days.

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

Vericel Corp Ord  vs.  Allogene Therapeutics

Vericel Corp Ord

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vericel Corp Ord are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Vericel Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Allogene Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allogene 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 essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vericel Corp and Allogene Therapeutics

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

The idea behind Vericel Corp Ord and Allogene Therapeutics 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.