Correlation Between Verve Therapeutics and Exagen

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

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

Diversification Opportunities for Verve Therapeutics and Exagen

-0.37

Correlation Coefficient

Verve Therapeutics  Exagen

Very good diversification

The 3 months correlation between Verve and Exagen is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Verve Therapeutics and Exagen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exagen Inc and Verve 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 Verve Therapeutics are associated (or correlated) with Exagen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exagen Inc has no effect on the direction of Verve Therapeutics i.e., Verve Therapeutics and Exagen go up and down completely randomly.

Pair Corralation between Verve Therapeutics and Exagen

Given the investment horizon of 90 days Verve Therapeutics is expected to generate 0.88 times more return on investment than Exagen. However, Verve Therapeutics is 1.13 times less risky than Exagen. It trades about 0.13 of its potential returns per unit of risk. Exagen Inc is currently generating about -0.01 per unit of risk. If you would invest  542.00  in Verve Therapeutics on August 15, 2024 and sell it today you would earn a total of  99.00  from holding Verve Therapeutics or generate 18.27% return on investment over 90 days.

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

Verve Therapeutics  vs.  Exagen Inc

Verve Therapeutics

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Verve Therapeutics are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Verve Therapeutics showed solid returns over the last few months and may actually be approaching a breakup point.

Exagen Inc

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Exagen Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Exagen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Verve Therapeutics and Exagen

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

The idea behind Verve Therapeutics and Exagen Inc 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.