Correlation Between Lyell Immunopharma and Ikena Oncology

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

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

Diversification Opportunities for Lyell Immunopharma and Ikena Oncology

0.77

Correlation Coefficient

Lyell Immunopharma  Ikena Oncology

Poor diversification

The 3 months correlation between Lyell and Ikena is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Lyell Immunopharma and Ikena Oncology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ikena Oncology and Lyell Immunopharma 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 Lyell Immunopharma are associated (or correlated) with Ikena Oncology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ikena Oncology has no effect on the direction of Lyell Immunopharma i.e., Lyell Immunopharma and Ikena Oncology go up and down completely randomly.

Pair Corralation between Lyell Immunopharma and Ikena Oncology

Given the investment horizon of 90 days Lyell Immunopharma is expected to generate 1.94 times more return on investment than Ikena Oncology. However, Lyell Immunopharma is 1.94 times more volatile than Ikena Oncology. It trades about 0.13 of its potential returns per unit of risk. Ikena Oncology is currently generating about -0.19 per unit of risk. If you would invest  63.00  in Lyell Immunopharma on November 28, 2024 and sell it today you would earn a total of  6.47  from holding Lyell Immunopharma or generate 10.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Lyell Immunopharma  vs.  Ikena Oncology

Lyell Immunopharma

Risk-Adjusted Performance

Very Weak

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

Ikena Oncology

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ikena Oncology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Lyell Immunopharma and Ikena Oncology

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

The idea behind Lyell Immunopharma and Ikena Oncology 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.