Correlation Between SpringWorks Therapeutics and Ocular Therapeutix

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

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

Diversification Opportunities for SpringWorks Therapeutics and Ocular Therapeutix

0.4

Correlation Coefficient

SpringWorks Therapeutics  Ocular Therapeutix

Very weak diversification

The 3 months correlation between SpringWorks and Ocular is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding SpringWorks Therapeutics and Ocular Therapeutix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocular Therapeutix and SpringWorks Therapeutics 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 SpringWorks Therapeutics are associated (or correlated) with Ocular Therapeutix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocular Therapeutix has no effect on the direction of SpringWorks Therapeutics i.e., SpringWorks Therapeutics and Ocular Therapeutix go up and down completely randomly.

Pair Corralation between SpringWorks Therapeutics and Ocular Therapeutix

Given the investment horizon of 90 days SpringWorks Therapeutics is expected to generate 7.25 times less return on investment than Ocular Therapeutix. But when comparing it to its historical volatility, SpringWorks Therapeutics is 7.81 times less risky than Ocular Therapeutix. It trades about 0.19 of its potential returns per unit of risk. Ocular Therapeutix is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  790.00  in Ocular Therapeutix on April 24, 2025 and sell it today you would earn a total of  365.00  from holding Ocular Therapeutix or generate 46.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	77.05%
Values	Daily Returns

SpringWorks Therapeutics  vs.  Ocular Therapeutix

SpringWorks Therapeutics

Risk-Adjusted Performance

Good

Over the last 90 days SpringWorks Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, SpringWorks Therapeutics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ocular Therapeutix

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ocular Therapeutix are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, Ocular Therapeutix disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SpringWorks Therapeutics and Ocular Therapeutix

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

The idea behind SpringWorks Therapeutics and Ocular Therapeutix 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.