Correlation Between Eterna Therapeutics and Twist Bioscience

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

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

Diversification Opportunities for Eterna Therapeutics and Twist Bioscience

-0.45

Correlation Coefficient

Eterna Therapeutics  Twist Bioscience

Very good diversification

The 3 months correlation between Eterna and Twist is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Eterna Therapeutics and Twist Bioscience Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Twist Bioscience Corp and Eterna 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 Eterna Therapeutics are associated (or correlated) with Twist Bioscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Twist Bioscience Corp has no effect on the direction of Eterna Therapeutics i.e., Eterna Therapeutics and Twist Bioscience go up and down completely randomly.

Pair Corralation between Eterna Therapeutics and Twist Bioscience

Given the investment horizon of 90 days Eterna Therapeutics is expected to under-perform the Twist Bioscience. In addition to that, Eterna Therapeutics is 1.3 times more volatile than Twist Bioscience Corp. It trades about -0.12 of its total potential returns per unit of risk. Twist Bioscience Corp is currently generating about 0.03 per unit of volatility. If you would invest  3,861  in Twist Bioscience Corp on September 21, 2024 and sell it today you would earn a total of  501.00  from holding Twist Bioscience Corp or generate 12.98% return on investment over 90 days.

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

Eterna Therapeutics  vs.  Twist Bioscience Corp

Eterna Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Eterna Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Twist Bioscience Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Twist Bioscience Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Twist Bioscience is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Eterna Therapeutics and Twist Bioscience

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

The idea behind Eterna Therapeutics and Twist Bioscience Corp 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.