Correlation Between Allogene Therapeutics and Brooklyn Immunotherapeuti

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Can any of the company-specific risk be diversified away by investing in both Allogene Therapeutics and Brooklyn Immunotherapeuti 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 Allogene Therapeutics and Brooklyn Immunotherapeuti into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Allogene Therapeutics and Brooklyn Immunotherapeutics, you can compare the effects of market volatilities on Allogene Therapeutics and Brooklyn Immunotherapeuti 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 Allogene Therapeutics with a short position of Brooklyn Immunotherapeuti. Check out your portfolio center. Please also check ongoing floating volatility patterns of Allogene Therapeutics and Brooklyn Immunotherapeuti.

Diversification Opportunities for Allogene Therapeutics and Brooklyn Immunotherapeuti

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Allogene and Brooklyn is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Allogene Therapeutics and Brooklyn Immunotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooklyn Immunotherapeuti and Allogene 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 Allogene Therapeutics are associated (or correlated) with Brooklyn Immunotherapeuti. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooklyn Immunotherapeuti has no effect on the direction of Allogene Therapeutics i.e., Allogene Therapeutics and Brooklyn Immunotherapeuti go up and down completely randomly.

Pair Corralation between Allogene Therapeutics and Brooklyn Immunotherapeuti

Given the investment horizon of 90 days Allogene Therapeutics is expected to generate 0.5 times more return on investment than Brooklyn Immunotherapeuti. However, Allogene Therapeutics is 2.0 times less risky than Brooklyn Immunotherapeuti. It trades about -0.02 of its potential returns per unit of risk. Brooklyn Immunotherapeutics is currently generating about -0.02 per unit of risk. If you would invest  3,634  in Allogene Therapeutics on July 9, 2022 and sell it today you would lose (2,538)  from holding Allogene Therapeutics or give up 69.84% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Allogene Therapeutics  vs.  Brooklyn Immunotherapeutics

 Performance (%) 
       Timeline  
Allogene Therapeutics 
Allogene Performance
1 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Allogene Therapeutics are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Allogene Therapeutics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Allogene Price Channel

Brooklyn Immunotherapeuti 
Brooklyn Performance
0 of 100
Over the last 90 days Brooklyn Immunotherapeutics 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 fairly strong which may send shares a bit higher in November 2022. The current disturbance may also be a sign of long term up-swing for the company investors.

Brooklyn Price Channel

Allogene Therapeutics and Brooklyn Immunotherapeuti Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Allogene Therapeutics and Brooklyn Immunotherapeuti

The main advantage of trading using opposite Allogene Therapeutics and Brooklyn Immunotherapeuti positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Allogene Therapeutics position performs unexpectedly, Brooklyn Immunotherapeuti 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 Brooklyn Immunotherapeuti will offset losses from the drop in Brooklyn Immunotherapeuti's long position.
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The idea behind Allogene Therapeutics and Brooklyn Immunotherapeutics 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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Check out your portfolio center. 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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