Correlation Between BridgeBio Pharma and Inovio Pharmaceuticals

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

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

Diversification Opportunities for BridgeBio Pharma and Inovio Pharmaceuticals

0.24

Correlation Coefficient

BridgeBio Pharma  Inovio Pharmaceuticals

Modest diversification

The 3 months correlation between BridgeBio and Inovio is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding BridgeBio Pharma and Inovio Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovio Pharmaceuticals and BridgeBio Pharma 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 BridgeBio Pharma are associated (or correlated) with Inovio Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovio Pharmaceuticals has no effect on the direction of BridgeBio Pharma i.e., BridgeBio Pharma and Inovio Pharmaceuticals go up and down completely randomly.

Pair Corralation between BridgeBio Pharma and Inovio Pharmaceuticals

Given the investment horizon of 90 days BridgeBio Pharma is expected to generate 1.12 times more return on investment than Inovio Pharmaceuticals. However, BridgeBio Pharma is 1.12 times more volatile than Inovio Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Inovio Pharmaceuticals is currently generating about -0.21 per unit of risk. If you would invest  2,799  in BridgeBio Pharma on September 11, 2024 and sell it today you would earn a total of  151.00  from holding BridgeBio Pharma or generate 5.39% return on investment over 90 days.

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

BridgeBio Pharma  vs.  Inovio Pharmaceuticals

BridgeBio Pharma

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BridgeBio Pharma are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady forward indicators, BridgeBio Pharma may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Inovio Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inovio Pharmaceuticals 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 very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with BridgeBio Pharma and Inovio Pharmaceuticals

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

The idea behind BridgeBio Pharma and Inovio Pharmaceuticals 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.