Correlation Between Fate Therapeutics and Instil Bio

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

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

Diversification Opportunities for Fate Therapeutics and Instil Bio

0.82

Correlation Coefficient

Fate Therapeutics  Instil Bio

Very poor diversification

The 3 months correlation between Fate and Instil is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Fate Therapeutics and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio and Fate 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 Fate Therapeutics 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 Fate Therapeutics i.e., Fate Therapeutics and Instil Bio go up and down completely randomly.

Pair Corralation between Fate Therapeutics and Instil Bio

Given the investment horizon of 90 days Fate Therapeutics is expected to under-perform the Instil Bio. In addition to that, Fate Therapeutics is 1.35 times more volatile than Instil Bio. It trades about -0.13 of its total potential returns per unit of risk. Instil Bio is currently generating about -0.15 per unit of volatility. If you would invest  2,615  in Instil Bio on September 23, 2024 and sell it today you would lose (554.00) from holding Instil Bio or give up 21.19% of portfolio value over 90 days.

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

Fate Therapeutics  vs.  Instil Bio

Fate Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fate 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 rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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 unsteady performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Fate Therapeutics and Instil Bio

The main advantage of trading using opposite Fate Therapeutics and Instil Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fate Therapeutics 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 Fate Therapeutics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.