Correlation Between SpringWorks Therapeutics and Veracyte

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

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

Diversification Opportunities for SpringWorks Therapeutics and Veracyte

-0.3

Correlation Coefficient

SpringWorks Therapeutics  Veracyte

Very good diversification

The 3 months correlation between SpringWorks and Veracyte is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding SpringWorks Therapeutics and Veracyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Veracyte 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 Veracyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Veracyte has no effect on the direction of SpringWorks Therapeutics i.e., SpringWorks Therapeutics and Veracyte go up and down completely randomly.

Pair Corralation between SpringWorks Therapeutics and Veracyte

Given the investment horizon of 90 days SpringWorks Therapeutics is expected to generate 2.77 times less return on investment than Veracyte. But when comparing it to its historical volatility, SpringWorks Therapeutics is 20.0 times less risky than Veracyte. It trades about 0.38 of its potential returns per unit of risk. Veracyte is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,849  in Veracyte on May 15, 2025 and sell it today you would earn a total of  219.00  from holding Veracyte or generate 7.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.61%
Values	Daily Returns

SpringWorks Therapeutics  vs.  Veracyte

SpringWorks Therapeutics

Risk-Adjusted Performance

Strong

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.

Veracyte

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Veracyte are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Veracyte may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with SpringWorks Therapeutics and Veracyte

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

The idea behind SpringWorks Therapeutics and Veracyte 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.