Correlation Between Exagen and Entrada Therapeutics

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

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

Diversification Opportunities for Exagen and Entrada Therapeutics

0.3

Correlation Coefficient

Exagen  Entrada Therapeutics

Weak diversification

The 3 months correlation between Exagen and Entrada is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Exagen Inc and Entrada Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Entrada Therapeutics and Exagen 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 Exagen Inc are associated (or correlated) with Entrada Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Entrada Therapeutics has no effect on the direction of Exagen i.e., Exagen and Entrada Therapeutics go up and down completely randomly.

Pair Corralation between Exagen and Entrada Therapeutics

Considering the 90-day investment horizon Exagen is expected to generate 1.38 times less return on investment than Entrada Therapeutics. But when comparing it to its historical volatility, Exagen Inc is 1.03 times less risky than Entrada Therapeutics. It trades about 0.03 of its potential returns per unit of risk. Entrada Therapeutics is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,387  in Entrada Therapeutics on October 5, 2024 and sell it today you would earn a total of  436.00  from holding Entrada Therapeutics or generate 31.43% return on investment over 90 days.

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

Exagen Inc  vs.  Entrada Therapeutics

Exagen Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Exagen Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Exagen displayed solid returns over the last few months and may actually be approaching a breakup point.

Entrada Therapeutics

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Entrada Therapeutics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating fundamental indicators, Entrada Therapeutics may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Exagen and Entrada Therapeutics

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

The idea behind Exagen Inc and Entrada 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.