Correlation Between Ventyx Biosciences and Stoke Therapeutics

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

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

Diversification Opportunities for Ventyx Biosciences and Stoke Therapeutics

0.19

Correlation Coefficient

Ventyx Biosciences  Stoke Therapeutics

Average diversification

The 3 months correlation between Ventyx and Stoke is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Ventyx Biosciences and Stoke Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stoke Therapeutics and Ventyx Biosciences 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 Ventyx Biosciences are associated (or correlated) with Stoke Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stoke Therapeutics has no effect on the direction of Ventyx Biosciences i.e., Ventyx Biosciences and Stoke Therapeutics go up and down completely randomly.

Pair Corralation between Ventyx Biosciences and Stoke Therapeutics

Given the investment horizon of 90 days Ventyx Biosciences is expected to under-perform the Stoke Therapeutics. In addition to that, Ventyx Biosciences is 1.53 times more volatile than Stoke Therapeutics. It trades about -0.03 of its total potential returns per unit of risk. Stoke Therapeutics is currently generating about -0.02 per unit of volatility. If you would invest  1,221  in Stoke Therapeutics on October 12, 2024 and sell it today you would lose (325.00) from holding Stoke Therapeutics or give up 26.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.47%
Values	Daily Returns

Ventyx Biosciences  vs.  Stoke Therapeutics

Ventyx Biosciences

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ventyx Biosciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Ventyx Biosciences may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Stoke Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stoke Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Ventyx Biosciences and Stoke Therapeutics

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

The idea behind Ventyx Biosciences and Stoke 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.