Correlation Between Instil Bio and Cara Therapeutic
Can any of the company-specific risk be diversified away by investing in both Instil Bio and Cara Therapeutic 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 Cara Therapeutic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Instil Bio and Cara Therapeutic, you can compare the effects of market volatilities on Instil Bio and Cara Therapeutic 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 Cara Therapeutic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Instil Bio and Cara Therapeutic.
Diversification Opportunities for Instil Bio and Cara Therapeutic
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Instil and Cara is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Instil Bio and Cara Therapeutic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cara Therapeutic 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 Cara Therapeutic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cara Therapeutic has no effect on the direction of Instil Bio i.e., Instil Bio and Cara Therapeutic go up and down completely randomly.
Pair Corralation between Instil Bio and Cara Therapeutic
Considering the 90-day investment horizon Instil Bio is expected to generate 1.72 times more return on investment than Cara Therapeutic. However, Instil Bio is 1.72 times more volatile than Cara Therapeutic. It trades about 0.11 of its potential returns per unit of risk. Cara Therapeutic is currently generating about -0.05 per unit of risk. If you would invest 1,069 in Instil Bio on August 29, 2024 and sell it today you would earn a total of 1,901 from holding Instil Bio or generate 177.83% 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. Cara Therapeutic
Performance |
| Timeline |
| Instil Bio |
| Cara Therapeutic |
Instil Bio and Cara Therapeutic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Instil Bio and Cara Therapeutic
The main advantage of trading using opposite Instil Bio and Cara Therapeutic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Instil Bio position performs unexpectedly, Cara Therapeutic 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 Cara Therapeutic will offset losses from the drop in Cara Therapeutic's long position.| Instil Bio vs. Assembly Biosciences | Instil Bio vs. Nuvation Bio | Instil Bio vs. Achilles Therapeutics PLC | Instil Bio vs. NextCure |
| Cara Therapeutic vs. 22nd Century Group | Cara Therapeutic vs. Corbus Pharmaceuticals Holding | Cara Therapeutic vs. Cannabis Sativa | Cara Therapeutic vs. General Cannabis Corp |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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