Correlation Between Instil Bio and Bolt Biotherapeutics

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

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

Diversification Opportunities for Instil Bio and Bolt Biotherapeutics

-0.24

Correlation Coefficient

Instil Bio  Bolt Biotherapeutics

Very good diversification

The 3 months correlation between Instil and Bolt is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Instil Bio and Bolt Biotherapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bolt Biotherapeutics and Instil Bio 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 Instil Bio are associated (or correlated) with Bolt Biotherapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bolt Biotherapeutics has no effect on the direction of Instil Bio i.e., Instil Bio and Bolt Biotherapeutics go up and down completely randomly.

Pair Corralation between Instil Bio and Bolt Biotherapeutics

Considering the 90-day investment horizon Instil Bio is expected to generate 6.33 times more return on investment than Bolt Biotherapeutics. However, Instil Bio is 6.33 times more volatile than Bolt Biotherapeutics. It trades about 0.13 of its potential returns per unit of risk. Bolt Biotherapeutics is currently generating about -0.02 per unit of risk. If you would invest  1,393  in Instil Bio on September 1, 2024 and sell it today you would earn a total of  1,298  from holding Instil Bio or generate 93.18% return on investment over 90 days.

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

Instil Bio  vs.  Bolt Biotherapeutics

Instil Bio

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Instil Bio are ranked lower than 10 (%) 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.

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, Bolt Biotherapeutics is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Instil Bio and Bolt Biotherapeutics

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

The idea behind Instil Bio and Bolt Biotherapeutics 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.