Correlation Between Mind Medicine and Bolt Biotherapeutics

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

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

Diversification Opportunities for Mind Medicine and Bolt Biotherapeutics

0.79

Correlation Coefficient

Mind Medicine  Bolt Biotherapeutics

Poor diversification

The 3 months correlation between Mind and Bolt is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Mind Medicine and Bolt Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Biotherapeutics and Mind Medicine 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 Mind Medicine are associated (or correlated) with Bolt Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Biotherapeutics has no effect on the direction of Mind Medicine i.e., Mind Medicine and Bolt Biotherapeutics go up and down completely randomly.

Pair Corralation between Mind Medicine and Bolt Biotherapeutics

Given the investment horizon of 90 days Mind Medicine is expected to generate 1.29 times more return on investment than Bolt Biotherapeutics. However, Mind Medicine is 1.29 times more volatile than Bolt Biotherapeutics. It trades about 0.06 of its potential returns per unit of risk. Bolt Biotherapeutics is currently generating about -0.02 per unit of risk. If you would invest  293.00  in Mind Medicine on July 21, 2024 and sell it today you would earn a total of  368.00  from holding Mind Medicine or generate 125.6% return on investment over 90 days.

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

Mind Medicine  vs.  Bolt Biotherapeutics

Mind Medicine

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mind Medicine 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 primary indicators remain rather sound which may send shares a bit higher in November 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics 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 essential indicators remain comparatively stable which may send shares a bit higher in November 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Mind Medicine and Bolt Biotherapeutics

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

The idea behind Mind Medicine and Bolt Biotherapeutics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.