Correlation Between Generation Bio and Transcode Therapeutics

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

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

Diversification Opportunities for Generation Bio and Transcode Therapeutics

0.51

Correlation Coefficient

Generation Bio  Transcode Therapeutics

Very weak diversification

The 3 months correlation between Generation and Transcode is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Generation Bio Co and Transcode Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcode Therapeutics and Generation Bio 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 Generation Bio Co are associated (or correlated) with Transcode Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcode Therapeutics has no effect on the direction of Generation Bio i.e., Generation Bio and Transcode Therapeutics go up and down completely randomly.

Pair Corralation between Generation Bio and Transcode Therapeutics

Given the investment horizon of 90 days Generation Bio is expected to generate 1.32 times less return on investment than Transcode Therapeutics. In addition to that, Generation Bio is 1.33 times more volatile than Transcode Therapeutics. It trades about 0.23 of its total potential returns per unit of risk. Transcode Therapeutics is currently generating about 0.41 per unit of volatility. If you would invest  780.00  in Transcode Therapeutics on April 30, 2025 and sell it today you would earn a total of  609.00  from holding Transcode Therapeutics or generate 78.08% return on investment over 90 days.

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

Generation Bio Co  vs.  Transcode Therapeutics

Generation Bio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Generation Bio Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Generation Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Transcode Therapeutics

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Transcode Therapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly inconsistent basic indicators, Transcode Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Generation Bio and Transcode Therapeutics

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

The idea behind Generation Bio Co and Transcode 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.