Correlation Between Intellia Therapeutics and Caribou Biosciences

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

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

Diversification Opportunities for Intellia Therapeutics and Caribou Biosciences

0.78

Correlation Coefficient

Intellia Therapeutics  Caribou Biosciences

Poor diversification

The 3 months correlation between Intellia and Caribou is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Intellia Therapeutics and Caribou Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caribou Biosciences 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 Caribou Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caribou Biosciences has no effect on the direction of Intellia Therapeutics i.e., Intellia Therapeutics and Caribou Biosciences go up and down completely randomly.

Pair Corralation between Intellia Therapeutics and Caribou Biosciences

Given the investment horizon of 90 days Intellia Therapeutics is expected to generate 1.14 times more return on investment than Caribou Biosciences. However, Intellia Therapeutics is 1.14 times more volatile than Caribou Biosciences. It trades about -0.09 of its potential returns per unit of risk. Caribou Biosciences is currently generating about -0.18 per unit of risk. If you would invest  1,141  in Intellia Therapeutics on December 30, 2024 and sell it today you would lose (334.00) from holding Intellia Therapeutics or give up 29.27% of portfolio value over 90 days.

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

Intellia Therapeutics  vs.  Caribou Biosciences

Intellia Therapeutics

Risk-Adjusted Performance

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Caribou Biosciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental drivers remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Intellia Therapeutics and Caribou Biosciences

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

The idea behind Intellia Therapeutics and Caribou Biosciences 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.