Correlation Between Inhibrx and Fortescue

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

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

Diversification Opportunities for Inhibrx and Fortescue

0.15

Correlation Coefficient

Inhibrx  Fortescue

Average diversification

The 3 months correlation between Inhibrx and Fortescue is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Inhibrx and Fortescue Metals Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortescue Metals and Inhibrx 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 Inhibrx are associated (or correlated) with Fortescue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortescue Metals has no effect on the direction of Inhibrx i.e., Inhibrx and Fortescue go up and down completely randomly.

Pair Corralation between Inhibrx and Fortescue

Given the investment horizon of 90 days Inhibrx is expected to under-perform the Fortescue. In addition to that, Inhibrx is 2.48 times more volatile than Fortescue Metals Group. It trades about -0.01 of its total potential returns per unit of risk. Fortescue Metals Group is currently generating about -0.01 per unit of volatility. If you would invest  9,700  in Fortescue Metals Group on September 3, 2024 and sell it today you would lose (98.00) from holding Fortescue Metals Group or give up 1.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	84.38%
Values	Daily Returns

Inhibrx  vs.  Fortescue Metals Group

Inhibrx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inhibrx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental drivers, Inhibrx is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Fortescue Metals

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Inhibrx and Fortescue

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

The idea behind Inhibrx and Fortescue Metals Group 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 Anywhere module to track or share privately all of your investments from the convenience of any device.