Correlation Between Instil Bio and TRACON Pharmaceuticals

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

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

Diversification Opportunities for Instil Bio and TRACON Pharmaceuticals

-0.41

Correlation Coefficient

Instil Bio  TRACON Pharmaceuticals

Very good diversification

The 3 months correlation between Instil and TRACON is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Instil Bio and TRACON Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TRACON Pharmaceuticals 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 TRACON Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TRACON Pharmaceuticals has no effect on the direction of Instil Bio i.e., Instil Bio and TRACON Pharmaceuticals go up and down completely randomly.

Pair Corralation between Instil Bio and TRACON Pharmaceuticals

If you would invest  1,393  in Instil Bio on August 31, 2024 and sell it today you would earn a total of  1,298  from holding Instil Bio or generate 93.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Instil Bio  vs.  TRACON Pharmaceuticals

Instil Bio

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Instil Bio are ranked lower than 9 (%) 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.

TRACON Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TRACON Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, TRACON 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 Instil Bio and TRACON Pharmaceuticals

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

The idea behind Instil Bio and TRACON 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.