Correlation Between Instil Bio and Fortress Biotech

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

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

Diversification Opportunities for Instil Bio and Fortress Biotech

0.32

Correlation Coefficient

Instil Bio  Fortress Biotech

Weak diversification

The 3 months correlation between Instil and Fortress is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Instil Bio and Fortress Biotech Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech Pref 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 Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech Pref has no effect on the direction of Instil Bio i.e., Instil Bio and Fortress Biotech go up and down completely randomly.

Pair Corralation between Instil Bio and Fortress Biotech

Considering the 90-day investment horizon Instil Bio is expected to generate 2.67 times more return on investment than Fortress Biotech. However, Instil Bio is 2.67 times more volatile than Fortress Biotech Pref. It trades about 0.03 of its potential returns per unit of risk. Fortress Biotech Pref is currently generating about -0.02 per unit of risk. If you would invest  1,899  in Instil Bio on December 28, 2024 and sell it today you would lose (44.00) from holding Instil Bio or give up 2.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Instil Bio  vs.  Fortress Biotech Pref

Instil Bio

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Instil Bio are ranked lower than 2 (%) 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.

Fortress Biotech Pref

Risk-Adjusted Performance

Very Weak

Over the last 90 days Fortress Biotech Pref has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Fortress Biotech is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Instil Bio and Fortress Biotech

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

The idea behind Instil Bio and Fortress Biotech Pref 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.