Correlation Between Intercept Pharmaceuticals and Atara Biotherapeutics

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

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

Diversification Opportunities for Intercept Pharmaceuticals and Atara Biotherapeutics

-0.61

Correlation Coefficient

Intercept Pharmaceuticals  Atara Biotherapeutics

Excellent diversification

The 3 months correlation between Intercept and Atara is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Intercept Pharmaceuticals and Atara Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atara Biotherapeutics and Intercept Pharmaceuticals 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 Intercept Pharmaceuticals are associated (or correlated) with Atara Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atara Biotherapeutics has no effect on the direction of Intercept Pharmaceuticals i.e., Intercept Pharmaceuticals and Atara Biotherapeutics go up and down completely randomly.

Pair Corralation between Intercept Pharmaceuticals and Atara Biotherapeutics

If you would invest  851.00  in Atara Biotherapeutics on September 17, 2024 and sell it today you would earn a total of  182.00  from holding Atara Biotherapeutics or generate 21.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.56%
Values	Daily Returns

Intercept Pharmaceuticals  vs.  Atara Biotherapeutics

Intercept Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intercept Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Intercept Pharmaceuticals is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Atara Biotherapeutics

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atara Biotherapeutics are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Atara Biotherapeutics sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intercept Pharmaceuticals and Atara Biotherapeutics

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

The idea behind Intercept Pharmaceuticals and Atara Biotherapeutics 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.