Correlation Between Tourmaline Bio and Wave Life

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

By analyzing existing cross correlation between Tourmaline Bio and Wave Life Sciences, you can compare the effects of market volatilities on Tourmaline Bio and Wave Life 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 Tourmaline Bio with a short position of Wave Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tourmaline Bio and Wave Life.

Diversification Opportunities for Tourmaline Bio and Wave Life

-0.79

Correlation Coefficient

Tourmaline Bio  Wave Life

Pay attention - limited upside

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

Pair Corralation between Tourmaline Bio and Wave Life

Given the investment horizon of 90 days Tourmaline Bio is expected to generate 1.81 times more return on investment than Wave Life. However, Tourmaline Bio is 1.81 times more volatile than Wave Life Sciences. It trades about 0.19 of its potential returns per unit of risk. Wave Life Sciences is currently generating about 0.0 per unit of risk. If you would invest  2,176  in Tourmaline Bio on August 1, 2025 and sell it today you would earn a total of  2,622  from holding Tourmaline Bio or generate 120.5% return on investment over 90 days.

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

Tourmaline Bio  vs.  Wave Life Sciences

Tourmaline Bio

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tourmaline Bio are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite quite weak primary indicators, Tourmaline Bio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Wave Life Sciences

Risk-Adjusted Performance

Weakest

Over the last 90 days Wave Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Wave Life is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Tourmaline Bio and Wave Life

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

The idea behind Tourmaline Bio and Wave Life Sciences 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.