Correlation Between Travere Therapeutics and Cogent Biosciences

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

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

Diversification Opportunities for Travere Therapeutics and Cogent Biosciences

0.59

Correlation Coefficient

Travere Therapeutics  Cogent Biosciences

Very weak diversification

The 3 months correlation between Travere and Cogent is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Travere Therapeutics and Cogent Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Biosciences and Travere 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 Travere Therapeutics are associated (or correlated) with Cogent Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Biosciences has no effect on the direction of Travere Therapeutics i.e., Travere Therapeutics and Cogent Biosciences go up and down completely randomly.

Pair Corralation between Travere Therapeutics and Cogent Biosciences

Given the investment horizon of 90 days Travere Therapeutics is expected to under-perform the Cogent Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Travere Therapeutics is 1.17 times less risky than Cogent Biosciences. The stock trades about -0.07 of its potential returns per unit of risk. The Cogent Biosciences is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  700.00  in Cogent Biosciences on March 1, 2025 and sell it today you would lose (149.00) from holding Cogent Biosciences or give up 21.29% of portfolio value over 90 days.

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

Travere Therapeutics  vs.  Cogent Biosciences

Travere Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Travere Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Cogent Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Biosciences 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Travere Therapeutics and Cogent Biosciences

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

The idea behind Travere Therapeutics and Cogent Biosciences 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.

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 the CEOs Directory module to screen CEOs from public companies around the world.