Correlation Between Intellia Therapeutics and Beam Therapeutics

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

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

Diversification Opportunities for Intellia Therapeutics and Beam Therapeutics

-0.08

Correlation Coefficient

Intellia Therapeutics  Beam Therapeutics

Good diversification

The 3 months correlation between Intellia and Beam is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Intellia Therapeutics and Beam Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beam Therapeutics and Intellia 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 Intellia Therapeutics are associated (or correlated) with Beam Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beam Therapeutics has no effect on the direction of Intellia Therapeutics i.e., Intellia Therapeutics and Beam Therapeutics go up and down completely randomly.

Pair Corralation between Intellia Therapeutics and Beam Therapeutics

Given the investment horizon of 90 days Intellia Therapeutics is expected to under-perform the Beam Therapeutics. In addition to that, Intellia Therapeutics is 1.02 times more volatile than Beam Therapeutics. It trades about -0.09 of its total potential returns per unit of risk. Beam Therapeutics is currently generating about 0.1 per unit of volatility. If you would invest  2,440  in Beam Therapeutics on September 12, 2024 and sell it today you would earn a total of  580.00  from holding Beam Therapeutics or generate 23.77% return on investment over 90 days.

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

Intellia Therapeutics  vs.  Beam Therapeutics

Intellia Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intellia Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat 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.

Beam Therapeutics

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Beam Therapeutics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Beam Therapeutics displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intellia Therapeutics and Beam Therapeutics

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

The idea behind Intellia Therapeutics and Beam Therapeutics 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.

Check out your portfolio center.

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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.