Correlation Between Sensei Biotherapeutics and Viridian Therapeutics

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

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

Diversification Opportunities for Sensei Biotherapeutics and Viridian Therapeutics

-0.83

Correlation Coefficient

Sensei Biotherapeutics  Viridian Therapeutics

Pay attention - limited upside

The 3 months correlation between Sensei and Viridian is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Sensei Biotherapeutics and Viridian Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viridian Therapeutics and Sensei Biotherapeutics 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 Sensei Biotherapeutics are associated (or correlated) with Viridian Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viridian Therapeutics has no effect on the direction of Sensei Biotherapeutics i.e., Sensei Biotherapeutics and Viridian Therapeutics go up and down completely randomly.

Pair Corralation between Sensei Biotherapeutics and Viridian Therapeutics

Given the investment horizon of 90 days Sensei Biotherapeutics is expected to under-perform the Viridian Therapeutics. In addition to that, Sensei Biotherapeutics is 1.95 times more volatile than Viridian Therapeutics. It trades about -0.07 of its total potential returns per unit of risk. Viridian Therapeutics is currently generating about 0.2 per unit of volatility. If you would invest  2,106  in Viridian Therapeutics on July 20, 2024 and sell it today you would earn a total of  320.00  from holding Viridian Therapeutics or generate 15.19% return on investment over 90 days.

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

Sensei Biotherapeutics  vs.  Viridian Therapeutics

Sensei Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sensei 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 basic 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.

Viridian Therapeutics

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Viridian Therapeutics are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Viridian Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sensei Biotherapeutics and Viridian Therapeutics

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

The idea behind Sensei Biotherapeutics and Viridian 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.