Correlation Between Precision BioSciences and SpringWorks Therapeutics

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

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

Diversification Opportunities for Precision BioSciences and SpringWorks Therapeutics

-0.41

Correlation Coefficient

Precision BioSciences  SpringWorks Therapeutics

Very good diversification

The 3 months correlation between Precision and SpringWorks is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Precision BioSciences and SpringWorks Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SpringWorks Therapeutics and Precision 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 Precision BioSciences are associated (or correlated) with SpringWorks Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SpringWorks Therapeutics has no effect on the direction of Precision BioSciences i.e., Precision BioSciences and SpringWorks Therapeutics go up and down completely randomly.

Pair Corralation between Precision BioSciences and SpringWorks Therapeutics

Given the investment horizon of 90 days Precision BioSciences is expected to generate 21.75 times more return on investment than SpringWorks Therapeutics. However, Precision BioSciences is 21.75 times more volatile than SpringWorks Therapeutics. It trades about 0.02 of its potential returns per unit of risk. SpringWorks Therapeutics is currently generating about 0.32 per unit of risk. If you would invest  469.00  in Precision BioSciences on May 19, 2025 and sell it today you would earn a total of  2.00  from holding Precision BioSciences or generate 0.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	47.62%
Values	Daily Returns

Precision BioSciences  vs.  SpringWorks Therapeutics

Precision BioSciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Precision BioSciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, Precision BioSciences is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

SpringWorks Therapeutics

Risk-Adjusted Performance

Solid

Over the last 90 days SpringWorks Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SpringWorks Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Precision BioSciences and SpringWorks Therapeutics

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

The idea behind Precision BioSciences and SpringWorks 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.