Correlation Between Cabaletta Bio and Gossamer Bio

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

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

Diversification Opportunities for Cabaletta Bio and Gossamer Bio

0.18

Correlation Coefficient

Cabaletta Bio  Gossamer Bio

Average diversification

The 3 months correlation between Cabaletta and Gossamer is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cabaletta Bio and Gossamer Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gossamer Bio and Cabaletta Bio 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 Cabaletta Bio are associated (or correlated) with Gossamer Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gossamer Bio has no effect on the direction of Cabaletta Bio i.e., Cabaletta Bio and Gossamer Bio go up and down completely randomly.

Pair Corralation between Cabaletta Bio and Gossamer Bio

Given the investment horizon of 90 days Cabaletta Bio is expected to generate 1.86 times less return on investment than Gossamer Bio. In addition to that, Cabaletta Bio is 1.55 times more volatile than Gossamer Bio. It trades about 0.08 of its total potential returns per unit of risk. Gossamer Bio is currently generating about 0.24 per unit of volatility. If you would invest  106.00  in Gossamer Bio on May 1, 2025 and sell it today you would earn a total of  102.00  from holding Gossamer Bio or generate 96.23% return on investment over 90 days.

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

Cabaletta Bio  vs.  Gossamer Bio

Cabaletta Bio

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cabaletta Bio are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, Cabaletta Bio sustained solid returns over the last few months and may actually be approaching a breakup point.

Gossamer Bio

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Gossamer Bio are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gossamer Bio unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cabaletta Bio and Gossamer Bio

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

The idea behind Cabaletta Bio and Gossamer Bio 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.