Correlation Between Inovio Pharmaceuticals and Cytodyn

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

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

Diversification Opportunities for Inovio Pharmaceuticals and Cytodyn

0.81

Correlation Coefficient

Inovio Pharmaceuticals  Cytodyn

Very poor diversification

The 3 months correlation between Inovio and Cytodyn is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Inovio Pharmaceuticals and Cytodyn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cytodyn 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 Cytodyn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cytodyn has no effect on the direction of Inovio Pharmaceuticals i.e., Inovio Pharmaceuticals and Cytodyn go up and down completely randomly.

Pair Corralation between Inovio Pharmaceuticals and Cytodyn

Considering the 90-day investment horizon Inovio Pharmaceuticals is expected to under-perform the Cytodyn. But the stock apears to be less risky and, when comparing its historical volatility, Inovio Pharmaceuticals is 1.4 times less risky than Cytodyn. The stock trades about -0.19 of its potential returns per unit of risk. The Cytodyn is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Cytodyn on September 9, 2024 and sell it today you would lose (5.00) from holding Cytodyn or give up 31.25% of portfolio value over 90 days.

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

Inovio Pharmaceuticals  vs.  Cytodyn

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.

Cytodyn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cytodyn has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Inovio Pharmaceuticals and Cytodyn

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

The idea behind Inovio Pharmaceuticals and Cytodyn 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.