Correlation Between Edgewise Therapeutics and PepGen

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

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

Diversification Opportunities for Edgewise Therapeutics and PepGen

0.71

Correlation Coefficient

Edgewise Therapeutics  PepGen

Poor diversification

The 3 months correlation between Edgewise and PepGen is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Edgewise Therapeutics and PepGen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PepGen and Edgewise 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 Edgewise Therapeutics are associated (or correlated) with PepGen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PepGen has no effect on the direction of Edgewise Therapeutics i.e., Edgewise Therapeutics and PepGen go up and down completely randomly.

Pair Corralation between Edgewise Therapeutics and PepGen

Given the investment horizon of 90 days Edgewise Therapeutics is expected to under-perform the PepGen. But the stock apears to be less risky and, when comparing its historical volatility, Edgewise Therapeutics is 2.05 times less risky than PepGen. The stock trades about -0.02 of its potential returns per unit of risk. The PepGen is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  126.00  in PepGen on May 7, 2025 and sell it today you would earn a total of  6.00  from holding PepGen or generate 4.76% return on investment over 90 days.

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

Edgewise Therapeutics  vs.  PepGen

Edgewise Therapeutics

Risk-Adjusted Performance

Weakest

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

PepGen

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in PepGen are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, PepGen reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Edgewise Therapeutics and PepGen

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

The idea behind Edgewise Therapeutics and PepGen 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.