Correlation Between Forte Biosciences and Lyell Immunopharma

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

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

Diversification Opportunities for Forte Biosciences and Lyell Immunopharma

0.59

Correlation Coefficient

Forte Biosciences  Lyell Immunopharma

Very weak diversification

The 3 months correlation between Forte and Lyell is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Forte Biosciences and Lyell Immunopharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lyell Immunopharma and Forte 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 Forte Biosciences are associated (or correlated) with Lyell Immunopharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lyell Immunopharma has no effect on the direction of Forte Biosciences i.e., Forte Biosciences and Lyell Immunopharma go up and down completely randomly.

Pair Corralation between Forte Biosciences and Lyell Immunopharma

Given the investment horizon of 90 days Forte Biosciences is expected to under-perform the Lyell Immunopharma. But the stock apears to be less risky and, when comparing its historical volatility, Forte Biosciences is 1.36 times less risky than Lyell Immunopharma. The stock trades about -0.06 of its potential returns per unit of risk. The Lyell Immunopharma is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  289.00  in Lyell Immunopharma on August 14, 2024 and sell it today you would lose (168.00) from holding Lyell Immunopharma or give up 58.13% of portfolio value over 90 days.

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

Forte Biosciences  vs.  Lyell Immunopharma

Forte Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forte Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Lyell Immunopharma

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Lyell Immunopharma are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating technical and fundamental indicators, Lyell Immunopharma disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Forte Biosciences and Lyell Immunopharma

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

The idea behind Forte Biosciences and Lyell Immunopharma 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.