Correlation Between Durect and Spero Therapeutics

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

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

Diversification Opportunities for Durect and Spero Therapeutics

0.05

Correlation Coefficient

Durect  Spero Therapeutics

Significant diversification

The 3 months correlation between Durect and Spero is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Durect and Spero Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spero Therapeutics and Durect 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 Durect are associated (or correlated) with Spero Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spero Therapeutics has no effect on the direction of Durect i.e., Durect and Spero Therapeutics go up and down completely randomly.

Pair Corralation between Durect and Spero Therapeutics

Given the investment horizon of 90 days Durect is expected to generate 1.09 times less return on investment than Spero Therapeutics. But when comparing it to its historical volatility, Durect is 1.01 times less risky than Spero Therapeutics. It trades about 0.12 of its potential returns per unit of risk. Spero Therapeutics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  61.00  in Spero Therapeutics on May 5, 2025 and sell it today you would earn a total of  169.00  from holding Spero Therapeutics or generate 277.05% return on investment over 90 days.

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

Durect  vs.  Spero Therapeutics

Durect

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Durect are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Durect showed solid returns over the last few months and may actually be approaching a breakup point.

Spero Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Spero Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Spero Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Durect and Spero Therapeutics

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

The idea behind Durect and Spero 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.