Correlation Between Ikena Oncology and Caribou Biosciences

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

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

Diversification Opportunities for Ikena Oncology and Caribou Biosciences

0.37

Correlation Coefficient

Ikena Oncology  Caribou Biosciences

Weak diversification

The 3 months correlation between Ikena and Caribou is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ikena Oncology and Caribou Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribou Biosciences and Ikena Oncology 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 Ikena Oncology are associated (or correlated) with Caribou Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribou Biosciences has no effect on the direction of Ikena Oncology i.e., Ikena Oncology and Caribou Biosciences go up and down completely randomly.

Pair Corralation between Ikena Oncology and Caribou Biosciences

Given the investment horizon of 90 days Ikena Oncology is expected to under-perform the Caribou Biosciences. But the stock apears to be less risky and, when comparing its historical volatility, Ikena Oncology is 4.14 times less risky than Caribou Biosciences. The stock trades about -0.01 of its potential returns per unit of risk. The Caribou Biosciences is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  216.00  in Caribou Biosciences on August 30, 2024 and sell it today you would earn a total of  4.00  from holding Caribou Biosciences or generate 1.85% return on investment over 90 days.

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

Ikena Oncology  vs.  Caribou Biosciences

Ikena Oncology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ikena Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ikena Oncology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Caribou Biosciences

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Caribou Biosciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental drivers, Caribou Biosciences may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Ikena Oncology and Caribou Biosciences

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

The idea behind Ikena Oncology and Caribou Biosciences 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.