Correlation Between Monopar Therapeutics and Instil Bio

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

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

Diversification Opportunities for Monopar Therapeutics and Instil Bio

0.32

Correlation Coefficient

Monopar Therapeutics  Instil Bio

Weak diversification

The 3 months correlation between Monopar and Instil is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Monopar Therapeutics and Instil Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Instil Bio and Monopar Therapeutics 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 Monopar Therapeutics 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 Monopar Therapeutics i.e., Monopar Therapeutics and Instil Bio go up and down completely randomly.

Pair Corralation between Monopar Therapeutics and Instil Bio

Given the investment horizon of 90 days Monopar Therapeutics is expected to generate 1.11 times more return on investment than Instil Bio. However, Monopar Therapeutics is 1.11 times more volatile than Instil Bio. It trades about 0.15 of its potential returns per unit of risk. Instil Bio is currently generating about 0.03 per unit of risk. If you would invest  2,385  in Monopar Therapeutics on December 28, 2024 and sell it today you would earn a total of  1,754  from holding Monopar Therapeutics or generate 73.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Monopar Therapeutics  vs.  Instil Bio

Monopar Therapeutics

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monopar Therapeutics are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Monopar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Instil Bio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Instil Bio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward indicators, Instil Bio disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monopar Therapeutics and Instil Bio

The main advantage of trading using opposite Monopar Therapeutics and Instil Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monopar Therapeutics 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 Monopar Therapeutics 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.