Correlation Between Enliven Therapeutics and Incyte

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

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

Diversification Opportunities for Enliven Therapeutics and Incyte

0.04

Correlation Coefficient

Enliven Therapeutics  Incyte

Significant diversification

The 3 months correlation between Enliven and Incyte is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Enliven Therapeutics and Incyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incyte and Enliven 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 Enliven Therapeutics are associated (or correlated) with Incyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incyte has no effect on the direction of Enliven Therapeutics i.e., Enliven Therapeutics and Incyte go up and down completely randomly.

Pair Corralation between Enliven Therapeutics and Incyte

Given the investment horizon of 90 days Enliven Therapeutics is expected to generate 2.56 times more return on investment than Incyte. However, Enliven Therapeutics is 2.56 times more volatile than Incyte. It trades about 0.02 of its potential returns per unit of risk. Incyte is currently generating about 0.01 per unit of risk. If you would invest  2,180  in Enliven Therapeutics on December 1, 2024 and sell it today you would lose (97.00) from holding Enliven Therapeutics or give up 4.45% of portfolio value over 90 days.

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

Enliven Therapeutics  vs.  Incyte

Enliven Therapeutics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Enliven Therapeutics 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 April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Incyte

Risk-Adjusted Performance

Weak

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

Pair Trading with Enliven Therapeutics and Incyte

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

The idea behind Enliven Therapeutics and Incyte 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .