Correlation Between 3I Group and Mustang Bio

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Can any of the company-specific risk be diversified away by investing in both 3I Group and Mustang Bio 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 3I Group and Mustang Bio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 3I Group Plc and Mustang Bio, you can compare the effects of market volatilities on 3I Group and Mustang Bio 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 3I Group with a short position of Mustang Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of 3I Group and Mustang Bio.

Diversification Opportunities for 3I Group and Mustang Bio

  Correlation Coefficient

Modest diversification

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

Pair Corralation between 3I Group and Mustang Bio

Assuming the 90 days horizon 3I Group Plc is expected to generate 0.63 times more return on investment than Mustang Bio. However, 3I Group Plc is 1.58 times less risky than Mustang Bio. It trades about 0.34 of its potential returns per unit of risk. Mustang Bio is currently generating about 0.02 per unit of risk. If you would invest  1,328  in 3I Group Plc on August 28, 2022 and sell it today you would earn a total of  305.00  from holding 3I Group Plc or generate 22.97% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
ValuesDaily Returns

3I Group Plc  vs.  Mustang Bio

 Performance (%) 
3I Group Plc 
TGOPF Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in 3I Group Plc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, 3I Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

TGOPF Price Channel

Mustang Bio 
Mustang Performance
0 of 100
Over the last 90 days Mustang Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in December 2022. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Mustang Price Channel

3I Group and Mustang Bio Volatility Contrast

   Predicted Return Density   

Pair Trading with 3I Group and Mustang Bio

The main advantage of trading using opposite 3I Group and Mustang Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 3I Group position performs unexpectedly, Mustang Bio 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 Mustang Bio will offset losses from the drop in Mustang Bio's long position.
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The idea behind 3I Group Plc and Mustang Bio 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.

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