Correlation Between Insmed and Exelixis

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

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

Diversification Opportunities for Insmed and Exelixis

0.11

Correlation Coefficient

Insmed  Exelixis

Average diversification

The 3 months correlation between Insmed and Exelixis is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Insmed Inc and Exelixis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exelixis and Insmed 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 Insmed Inc are associated (or correlated) with Exelixis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exelixis has no effect on the direction of Insmed i.e., Insmed and Exelixis go up and down completely randomly.

Pair Corralation between Insmed and Exelixis

Given the investment horizon of 90 days Insmed Inc is expected to generate 0.92 times more return on investment than Exelixis. However, Insmed Inc is 1.09 times less risky than Exelixis. It trades about 0.1 of its potential returns per unit of risk. Exelixis is currently generating about 0.07 per unit of risk. If you would invest  6,887  in Insmed Inc on December 29, 2024 and sell it today you would earn a total of  912.00  from holding Insmed Inc or generate 13.24% return on investment over 90 days.

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

Insmed Inc  vs.  Exelixis

Insmed Inc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Insmed Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Insmed displayed solid returns over the last few months and may actually be approaching a breakup point.

Exelixis

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Exelixis are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical and fundamental indicators, Exelixis may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Insmed and Exelixis

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

The idea behind Insmed Inc and Exelixis 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.