Correlation Between Exelixis and Incyte

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

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

Diversification Opportunities for Exelixis and Incyte

-0.38

Correlation Coefficient

Exelixis  Incyte

Very good diversification

The 3 months correlation between Exelixis and Incyte is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Exelixis and Incyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incyte and Exelixis 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 Exelixis 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 Exelixis i.e., Exelixis and Incyte go up and down completely randomly.

Pair Corralation between Exelixis and Incyte

Given the investment horizon of 90 days Exelixis is expected to generate 1.1 times more return on investment than Incyte. However, Exelixis is 1.1 times more volatile than Incyte. It trades about 0.07 of its potential returns per unit of risk. Incyte is currently generating about -0.08 per unit of risk. If you would invest  3,370  in Exelixis on December 29, 2024 and sell it today you would earn a total of  300.00  from holding Exelixis or generate 8.9% return on investment over 90 days.

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

Exelixis  vs.  Incyte

Exelixis

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Exelixis may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Incyte

Risk-Adjusted Performance

Very Weak

Over the last 90 days Incyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Exelixis and Incyte

The main advantage of trading using opposite Exelixis and Incyte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exelixis 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 Exelixis 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.