Correlation Between Equillium and Instil Bio

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

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

Diversification Opportunities for Equillium and Instil Bio

0.49

Correlation Coefficient

Equillium  Instil Bio

Very weak diversification

The 3 months correlation between Equillium and Instil is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio and Equillium 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 Equillium are associated (or correlated) with Instil Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instil Bio has no effect on the direction of Equillium i.e., Equillium and Instil Bio go up and down completely randomly.

Pair Corralation between Equillium and Instil Bio

Allowing for the 90-day total investment horizon Equillium is expected to generate 2.72 times less return on investment than Instil Bio. But when comparing it to its historical volatility, Equillium is 1.13 times less risky than Instil Bio. It trades about 0.03 of its potential returns per unit of risk. Instil Bio is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  738.00  in Instil Bio on October 7, 2024 and sell it today you would earn a total of  1,323  from holding Instil Bio or generate 179.27% return on investment over 90 days.

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

Equillium  vs.  Instil Bio

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Equillium is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Instil Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Instil Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Equillium and Instil Bio

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

The idea behind Equillium and Instil 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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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.