Correlation Between Intellia Therapeutics and Equillium

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

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

Diversification Opportunities for Intellia Therapeutics and Equillium

0.59

Correlation Coefficient

Intellia Therapeutics  Equillium

Very weak diversification

The 3 months correlation between Intellia and Equillium is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Intellia Therapeutics and Equillium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equillium 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 Equillium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equillium has no effect on the direction of Intellia Therapeutics i.e., Intellia Therapeutics and Equillium go up and down completely randomly.

Pair Corralation between Intellia Therapeutics and Equillium

Given the investment horizon of 90 days Intellia Therapeutics is expected to under-perform the Equillium. But the stock apears to be less risky and, when comparing its historical volatility, Intellia Therapeutics is 1.05 times less risky than Equillium. The stock trades about -0.28 of its potential returns per unit of risk. The Equillium is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Equillium on October 22, 2024 and sell it today you would earn a total of  4.00  from holding Equillium or generate 6.67% return on investment over 90 days.

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

Intellia Therapeutics  vs.  Equillium

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

Equillium

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Equillium has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Intellia Therapeutics and Equillium

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

The idea behind Intellia Therapeutics and Equillium 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.