Correlation Between Inozyme Pharma and Instil Bio

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

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

Diversification Opportunities for Inozyme Pharma and Instil Bio

0.75

Correlation Coefficient

Inozyme Pharma  Instil Bio

Poor diversification

The 3 months correlation between Inozyme and Instil is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Inozyme Pharma and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio and Inozyme Pharma 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 Inozyme Pharma are associated (or correlated) with Instil Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Instil Bio has no effect on the direction of Inozyme Pharma i.e., Inozyme Pharma and Instil Bio go up and down completely randomly.

Pair Corralation between Inozyme Pharma and Instil Bio

Given the investment horizon of 90 days Inozyme Pharma is expected to generate 0.65 times more return on investment than Instil Bio. However, Inozyme Pharma is 1.53 times less risky than Instil Bio. It trades about -0.01 of its potential returns per unit of risk. Instil Bio is currently generating about -0.1 per unit of risk. If you would invest  313.00  in Inozyme Pharma on September 16, 2024 and sell it today you would lose (10.00) from holding Inozyme Pharma or give up 3.19% of portfolio value over 90 days.

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

Inozyme Pharma  vs.  Instil Bio

Inozyme Pharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inozyme Pharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic 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.

Instil Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Instil Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Inozyme Pharma and Instil Bio

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

The idea behind Inozyme Pharma and Instil Bio 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.