Correlation Between Revolution Medicines and ProKidney Corp

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

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

Diversification Opportunities for Revolution Medicines and ProKidney Corp

-0.49

Correlation Coefficient

Revolution Medicines  ProKidney Corp

Very good diversification

The 3 months correlation between Revolution and ProKidney is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Medicines and ProKidney Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ProKidney Corp and Revolution Medicines 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 Revolution Medicines are associated (or correlated) with ProKidney Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ProKidney Corp has no effect on the direction of Revolution Medicines i.e., Revolution Medicines and ProKidney Corp go up and down completely randomly.

Pair Corralation between Revolution Medicines and ProKidney Corp

Given the investment horizon of 90 days Revolution Medicines is expected to under-perform the ProKidney Corp. But the stock apears to be less risky and, when comparing its historical volatility, Revolution Medicines is 28.08 times less risky than ProKidney Corp. The stock trades about -0.09 of its potential returns per unit of risk. The ProKidney Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  72.00  in ProKidney Corp on May 9, 2025 and sell it today you would earn a total of  184.50  from holding ProKidney Corp or generate 256.25% return on investment over 90 days.

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

Revolution Medicines  vs.  ProKidney Corp

Revolution Medicines

Risk-Adjusted Performance

Weakest

Over the last 90 days Revolution Medicines 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 September 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

ProKidney Corp

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in ProKidney Corp are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, ProKidney Corp disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Revolution Medicines and ProKidney Corp

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

The idea behind Revolution Medicines and ProKidney 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.