Correlation Between Kezar Life and Inovio Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both Kezar Life and Inovio 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 Kezar Life and Inovio Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kezar Life Sciences and Inovio Pharmaceuticals, you can compare the effects of market volatilities on Kezar Life and Inovio 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 Kezar Life with a short position of Inovio Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kezar Life and Inovio Pharmaceuticals.
Diversification Opportunities for Kezar Life and Inovio Pharmaceuticals
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Kezar and Inovio is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Kezar Life Sciences and Inovio Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovio Pharmaceuticals and Kezar Life 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 Kezar Life Sciences are associated (or correlated) with Inovio Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovio Pharmaceuticals has no effect on the direction of Kezar Life i.e., Kezar Life and Inovio Pharmaceuticals go up and down completely randomly.
Pair Corralation between Kezar Life and Inovio Pharmaceuticals
Considering the 90-day investment horizon Kezar Life Sciences is expected to under-perform the Inovio Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Kezar Life Sciences is 1.17 times less risky than Inovio Pharmaceuticals. The stock trades about -0.07 of its potential returns per unit of risk. The Inovio Pharmaceuticals is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 2,076 in Inovio Pharmaceuticals on August 30, 2024 and sell it today you would lose (1,657) from holding Inovio Pharmaceuticals or give up 79.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kezar Life Sciences vs. Inovio Pharmaceuticals
Performance |
| Timeline |
| Kezar Life Sciences |
| Inovio Pharmaceuticals |
Kezar Life and Inovio Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kezar Life and Inovio Pharmaceuticals
The main advantage of trading using opposite Kezar Life and Inovio Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kezar Life position performs unexpectedly, Inovio 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 Inovio Pharmaceuticals will offset losses from the drop in Inovio Pharmaceuticals' long position.| Kezar Life vs. Century Therapeutics | Kezar Life vs. Mineralys Therapeutics, Common | Kezar Life vs. Nkarta Inc | Kezar Life vs. Surrozen |
| Inovio Pharmaceuticals vs. Novavax | Inovio Pharmaceuticals vs. Vaxart Inc | Inovio Pharmaceuticals vs. Enveric Biosciences | Inovio Pharmaceuticals vs. Ocean Biomedical |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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