Correlation Between Allogene Therapeutics and Ibio

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

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

Diversification Opportunities for Allogene Therapeutics and Ibio

0.17

Correlation Coefficient

Allogene Therapeutics  Ibio

Average diversification

The 3 months correlation between Allogene and Ibio is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Allogene Therapeutics and Ibio Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ibio Inc and Allogene 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 Allogene Therapeutics are associated (or correlated) with Ibio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ibio Inc has no effect on the direction of Allogene Therapeutics i.e., Allogene Therapeutics and Ibio go up and down completely randomly.

Pair Corralation between Allogene Therapeutics and Ibio

Given the investment horizon of 90 days Allogene Therapeutics is expected to under-perform the Ibio. But the stock apears to be less risky and, when comparing its historical volatility, Allogene Therapeutics is 1.03 times less risky than Ibio. The stock trades about -0.04 of its potential returns per unit of risk. The Ibio Inc is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  182.00  in Ibio Inc on September 25, 2024 and sell it today you would earn a total of  54.00  from holding Ibio Inc or generate 29.67% return on investment over 90 days.

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

Allogene Therapeutics  vs.  Ibio Inc

Allogene Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Allogene Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's essential indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ibio Inc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ibio Inc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Ibio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Allogene Therapeutics and Ibio

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

The idea behind Allogene Therapeutics and Ibio Inc 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.