Correlation Between Insmed and Ultragenyx

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

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

Diversification Opportunities for Insmed and Ultragenyx

0.07

Correlation Coefficient

Insmed  Ultragenyx

Significant diversification

The 3 months correlation between Insmed and Ultragenyx is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Insmed Inc and Ultragenyx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ultragenyx 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 Ultragenyx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ultragenyx has no effect on the direction of Insmed i.e., Insmed and Ultragenyx go up and down completely randomly.

Pair Corralation between Insmed and Ultragenyx

Given the investment horizon of 90 days Insmed Inc is expected to generate 0.9 times more return on investment than Ultragenyx. However, Insmed Inc is 1.11 times less risky than Ultragenyx. It trades about 0.1 of its potential returns per unit of risk. Ultragenyx is currently generating about -0.06 per unit of risk. If you would invest  6,887  in Insmed Inc on December 30, 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.  Ultragenyx

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.

Ultragenyx

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ultragenyx 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with Insmed and Ultragenyx

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

The idea behind Insmed Inc and Ultragenyx 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.