Correlation Between Incyte and Ionis Pharmaceuticals

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

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

Diversification Opportunities for Incyte and Ionis Pharmaceuticals

-0.08

Correlation Coefficient

Incyte  Ionis Pharmaceuticals

Good diversification

The 3 months correlation between Incyte and Ionis is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and Ionis Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ionis Pharmaceuticals and Incyte 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 Incyte are associated (or correlated) with Ionis Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ionis Pharmaceuticals has no effect on the direction of Incyte i.e., Incyte and Ionis Pharmaceuticals go up and down completely randomly.

Pair Corralation between Incyte and Ionis Pharmaceuticals

Given the investment horizon of 90 days Incyte is expected to under-perform the Ionis Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Incyte is 1.19 times less risky than Ionis Pharmaceuticals. The stock trades about -0.08 of its potential returns per unit of risk. The Ionis Pharmaceuticals is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  3,492  in Ionis Pharmaceuticals on December 28, 2024 and sell it today you would lose (377.00) from holding Ionis Pharmaceuticals or give up 10.8% of portfolio value over 90 days.

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

Incyte  vs.  Ionis Pharmaceuticals

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 weak 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.

Ionis Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ionis Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Incyte and Ionis Pharmaceuticals

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

The idea behind Incyte and Ionis Pharmaceuticals 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.