Correlation Between Nektar Therapeutics and Inovio Pharmaceuticals

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

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

Diversification Opportunities for Nektar Therapeutics and Inovio Pharmaceuticals

-0.58

Correlation Coefficient

Nektar Therapeutics  Inovio Pharmaceuticals

Excellent diversification

The 3 months correlation between Nektar and Inovio is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Nektar Therapeutics and Inovio Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovio Pharmaceuticals and Nektar Therapeutics 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 Nektar Therapeutics 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 Nektar Therapeutics i.e., Nektar Therapeutics and Inovio Pharmaceuticals go up and down completely randomly.

Pair Corralation between Nektar Therapeutics and Inovio Pharmaceuticals

Given the investment horizon of 90 days Nektar Therapeutics is expected to generate 3.46 times more return on investment than Inovio Pharmaceuticals. However, Nektar Therapeutics is 3.46 times more volatile than Inovio Pharmaceuticals. It trades about 0.13 of its potential returns per unit of risk. Inovio Pharmaceuticals is currently generating about -0.01 per unit of risk. If you would invest  908.00  in Nektar Therapeutics on May 7, 2025 and sell it today you would earn a total of  1,376  from holding Nektar Therapeutics or generate 151.6% return on investment over 90 days.

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

Nektar Therapeutics  vs.  Inovio Pharmaceuticals

Nektar Therapeutics

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nektar Therapeutics are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Nektar Therapeutics reported solid returns over the last few months and may actually be approaching a breakup point.

Inovio Pharmaceuticals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Inovio Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Inovio Pharmaceuticals is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Nektar Therapeutics and Inovio Pharmaceuticals

The main advantage of trading using opposite Nektar Therapeutics and Inovio Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nektar Therapeutics 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.

The idea behind Nektar Therapeutics and Inovio 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.