Correlation Between Allogene Therapeutics and Fate Therapeutics

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

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

Diversification Opportunities for Allogene Therapeutics and Fate Therapeutics

0.51

Correlation Coefficient

Allogene Therapeutics  Fate Therapeutics

Very weak diversification

The 3 months correlation between Allogene and Fate is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Allogene Therapeutics and Fate Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fate Therapeutics and Allogene Therapeutics 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 Allogene Therapeutics are associated (or correlated) with Fate Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fate Therapeutics has no effect on the direction of Allogene Therapeutics i.e., Allogene Therapeutics and Fate Therapeutics go up and down completely randomly.

Pair Corralation between Allogene Therapeutics and Fate Therapeutics

Given the investment horizon of 90 days Allogene Therapeutics is expected to under-perform the Fate Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Allogene Therapeutics is 1.02 times less risky than Fate Therapeutics. The stock trades about -0.02 of its potential returns per unit of risk. The Fate Therapeutics is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  96.00  in Fate Therapeutics on May 6, 2025 and sell it today you would earn a total of  11.00  from holding Fate Therapeutics or generate 11.46% return on investment over 90 days.

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

Allogene Therapeutics  vs.  Fate Therapeutics

Allogene Therapeutics

Risk-Adjusted Performance

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 latest weak performance, the Stock's essential indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Fate Therapeutics

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Allogene Therapeutics and Fate Therapeutics

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

The idea behind Allogene Therapeutics and Fate 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.