Correlation Between Vaxcyte and Incyte

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

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

Diversification Opportunities for Vaxcyte and Incyte

-0.27

Correlation Coefficient

Vaxcyte  Incyte

Very good diversification

The 3 months correlation between Vaxcyte and Incyte is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Vaxcyte and Incyte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Incyte and Vaxcyte 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 Vaxcyte are associated (or correlated) with Incyte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Incyte has no effect on the direction of Vaxcyte i.e., Vaxcyte and Incyte go up and down completely randomly.

Pair Corralation between Vaxcyte and Incyte

Given the investment horizon of 90 days Vaxcyte is expected to under-perform the Incyte. In addition to that, Vaxcyte is 1.28 times more volatile than Incyte. It trades about -0.16 of its total potential returns per unit of risk. Incyte is currently generating about 0.0 per unit of volatility. If you would invest  7,211  in Incyte on October 8, 2024 and sell it today you would lose (20.00) from holding Incyte or give up 0.28% of portfolio value over 90 days.

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

Vaxcyte  vs.  Incyte

Vaxcyte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaxcyte 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 basic indicators remain fairly 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.

Incyte

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Incyte are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental indicators, Incyte may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vaxcyte and Incyte

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

The idea behind Vaxcyte and Incyte 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.