Correlation Between Instil Bio and NextCure

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

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

Diversification Opportunities for Instil Bio and NextCure

-0.6

Correlation Coefficient

Instil Bio  NextCure

Excellent diversification

The 3 months correlation between Instil and NextCure is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Instil Bio and NextCure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NextCure 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 NextCure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NextCure has no effect on the direction of Instil Bio i.e., Instil Bio and NextCure go up and down completely randomly.

Pair Corralation between Instil Bio and NextCure

Considering the 90-day investment horizon Instil Bio is expected to under-perform the NextCure. In addition to that, Instil Bio is 2.44 times more volatile than NextCure. It trades about -0.22 of its total potential returns per unit of risk. NextCure is currently generating about -0.13 per unit of volatility. If you would invest  140.00  in NextCure on August 13, 2024 and sell it today you would lose (11.00) from holding NextCure or give up 7.86% of portfolio value over 90 days.

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

Instil Bio  vs.  NextCure

Instil Bio

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Instil Bio are ranked lower than 13 (%) 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.

NextCure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NextCure has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in December 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Instil Bio and NextCure

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

The idea behind Instil Bio and NextCure 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.