Correlation Between MoonLake Immunotherapeuti and Innovator IBD

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

By analyzing existing cross correlation between MoonLake Immunotherapeutics and Innovator IBD 50, you can compare the effects of market volatilities on MoonLake Immunotherapeuti and Innovator IBD 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 MoonLake Immunotherapeuti with a short position of Innovator IBD. Check out your portfolio center. Please also check ongoing floating volatility patterns of MoonLake Immunotherapeuti and Innovator IBD.

Diversification Opportunities for MoonLake Immunotherapeuti and Innovator IBD

0.72

Correlation Coefficient

MoonLake Immunotherapeuti  Innovator IBD

Poor diversification

The 3 months correlation between MoonLake and Innovator is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MoonLake Immunotherapeutics and Innovator IBD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator IBD 50 and MoonLake Immunotherapeuti 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 MoonLake Immunotherapeutics are associated (or correlated) with Innovator IBD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator IBD 50 has no effect on the direction of MoonLake Immunotherapeuti i.e., MoonLake Immunotherapeuti and Innovator IBD go up and down completely randomly.

Pair Corralation between MoonLake Immunotherapeuti and Innovator IBD

Given the investment horizon of 90 days MoonLake Immunotherapeutics is expected to under-perform the Innovator IBD. In addition to that, MoonLake Immunotherapeuti is 1.41 times more volatile than Innovator IBD 50. It trades about -0.02 of its total potential returns per unit of risk. Innovator IBD 50 is currently generating about -0.02 per unit of volatility. If you would invest  3,052  in Innovator IBD 50 on October 8, 2024 and sell it today you would lose (38.00) from holding Innovator IBD 50 or give up 1.25% of portfolio value over 90 days.

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

MoonLake Immunotherapeutics  vs.  Innovator IBD 50

MoonLake Immunotherapeuti

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in MoonLake Immunotherapeutics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, MoonLake Immunotherapeuti may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Innovator IBD 50

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Innovator IBD 50 are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Innovator IBD may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with MoonLake Immunotherapeuti and Innovator IBD

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

The idea behind MoonLake Immunotherapeutics and Innovator IBD 50 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 Transaction History module to view history of all your transactions and understand their impact on performance.