Correlation Between Incyte and Nurix Therapeutics

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

By analyzing existing cross correlation between Incyte and Nurix Therapeutics, you can compare the effects of market volatilities on Incyte and Nurix Therapeutics 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 Nurix Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incyte and Nurix Therapeutics.

Diversification Opportunities for Incyte and Nurix Therapeutics

0.36

Correlation Coefficient

Incyte  Nurix Therapeutics

Weak diversification

The 3 months correlation between Incyte and Nurix is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and Nurix Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nurix Therapeutics 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 Nurix Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nurix Therapeutics has no effect on the direction of Incyte i.e., Incyte and Nurix Therapeutics go up and down completely randomly.

Pair Corralation between Incyte and Nurix Therapeutics

Given the investment horizon of 90 days Incyte is expected to under-perform the Nurix Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Incyte is 1.78 times less risky than Nurix Therapeutics. The stock trades about -0.19 of its potential returns per unit of risk. The Nurix Therapeutics is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,006  in Nurix Therapeutics on October 6, 2024 and sell it today you would lose (55.00) from holding Nurix Therapeutics or give up 2.74% of portfolio value over 90 days.

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

Incyte  vs.  Nurix Therapeutics

Incyte

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Incyte are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Incyte may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nurix Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Incyte and Nurix Therapeutics

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

The idea behind Incyte and Nurix Therapeutics 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.