Correlation Between Nkarta and Lyell Immunopharma

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

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

Diversification Opportunities for Nkarta and Lyell Immunopharma

0.6

Correlation Coefficient

Nkarta  Lyell Immunopharma

Poor diversification

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

Pair Corralation between Nkarta and Lyell Immunopharma

Given the investment horizon of 90 days Nkarta Inc is expected to under-perform the Lyell Immunopharma. But the stock apears to be less risky and, when comparing its historical volatility, Nkarta Inc is 1.38 times less risky than Lyell Immunopharma. The stock trades about -0.15 of its potential returns per unit of risk. The Lyell Immunopharma is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  140.00  in Lyell Immunopharma on September 2, 2024 and sell it today you would lose (45.00) from holding Lyell Immunopharma or give up 32.14% of portfolio value over 90 days.

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

Nkarta Inc  vs.  Lyell Immunopharma

Nkarta Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nkarta Inc 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 basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Lyell Immunopharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Lyell Immunopharma has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Nkarta and Lyell Immunopharma

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

The idea behind Nkarta Inc and Lyell Immunopharma 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.