Correlation Between Instil Bio and Eledon Pharmaceuticals

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

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

Diversification Opportunities for Instil Bio and Eledon Pharmaceuticals

-0.51

Correlation Coefficient

Instil Bio  Eledon Pharmaceuticals

Excellent diversification

The 3 months correlation between Instil and Eledon is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Instil Bio and Eledon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eledon Pharmaceuticals 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 Eledon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eledon Pharmaceuticals has no effect on the direction of Instil Bio i.e., Instil Bio and Eledon Pharmaceuticals go up and down completely randomly.

Pair Corralation between Instil Bio and Eledon Pharmaceuticals

Considering the 90-day investment horizon Instil Bio is expected to generate 1.35 times more return on investment than Eledon Pharmaceuticals. However, Instil Bio is 1.35 times more volatile than Eledon Pharmaceuticals. It trades about 0.04 of its potential returns per unit of risk. Eledon Pharmaceuticals is currently generating about 0.04 per unit of risk. If you would invest  1,561  in Instil Bio on October 4, 2024 and sell it today you would earn a total of  601.00  from holding Instil Bio or generate 38.5% return on investment over 90 days.

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

Instil Bio  vs.  Eledon Pharmaceuticals

Instil Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Instil Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Eledon Pharmaceuticals

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eledon Pharmaceuticals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Eledon Pharmaceuticals displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Instil Bio and Eledon Pharmaceuticals

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

The idea behind Instil Bio and Eledon Pharmaceuticals 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.