Correlation Between Inovio Pharmaceuticals and BridgeBio Pharma

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

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

Diversification Opportunities for Inovio Pharmaceuticals and BridgeBio Pharma

0.24

Correlation Coefficient

Inovio Pharmaceuticals  BridgeBio Pharma

Modest diversification

The 3 months correlation between Inovio and BridgeBio is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Inovio Pharmaceuticals and BridgeBio Pharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BridgeBio Pharma and Inovio 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 Inovio Pharmaceuticals are associated (or correlated) with BridgeBio Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BridgeBio Pharma has no effect on the direction of Inovio Pharmaceuticals i.e., Inovio Pharmaceuticals and BridgeBio Pharma go up and down completely randomly.

Pair Corralation between Inovio Pharmaceuticals and BridgeBio Pharma

Considering the 90-day investment horizon Inovio Pharmaceuticals is expected to generate 1.54 times more return on investment than BridgeBio Pharma. However, Inovio Pharmaceuticals is 1.54 times more volatile than BridgeBio Pharma. It trades about 0.02 of its potential returns per unit of risk. BridgeBio Pharma is currently generating about -0.01 per unit of risk. If you would invest  454.00  in Inovio Pharmaceuticals on September 11, 2024 and sell it today you would lose (40.00) from holding Inovio Pharmaceuticals or give up 8.81% of portfolio value over 90 days.

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

Inovio Pharmaceuticals  vs.  BridgeBio Pharma

Inovio Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inovio Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

BridgeBio Pharma

Risk-Adjusted Performance

3 of 100

Very Weak

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

Pair Trading with Inovio Pharmaceuticals and BridgeBio Pharma

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

The idea behind Inovio Pharmaceuticals and BridgeBio Pharma 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.