Correlation Between Incyte and Illumina
Can any of the company-specific risk be diversified away by investing in both Incyte and Illumina 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 Incyte and Illumina into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Incyte and Illumina, you can compare the effects of market volatilities on Incyte and Illumina 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 Incyte with a short position of Illumina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Incyte and Illumina.
Diversification Opportunities for Incyte and Illumina
Poor diversification
The 3 months correlation between Incyte and Illumina is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Incyte and Illumina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illumina and Incyte 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 Incyte are associated (or correlated) with Illumina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illumina has no effect on the direction of Incyte i.e., Incyte and Illumina go up and down completely randomly.
Pair Corralation between Incyte and Illumina
Given the investment horizon of 90 days Incyte is expected to generate 0.51 times more return on investment than Illumina. However, Incyte is 1.98 times less risky than Illumina. It trades about -0.05 of its potential returns per unit of risk. Illumina is currently generating about -0.04 per unit of risk. If you would invest 8,072 in Incyte on January 24, 2024 and sell it today you would lose (2,907) from holding Incyte or give up 36.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Incyte vs. Illumina
Performance |
| Timeline |
| Incyte |
| Illumina |
Incyte and Illumina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Incyte and Illumina
The main advantage of trading using opposite Incyte and Illumina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Incyte position performs unexpectedly, Illumina 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 Illumina will offset losses from the drop in Illumina's long position.| Incyte vs. Alnylam Pharmaceuticals | Incyte vs. United Therapeutics | Incyte vs. Ultragenyx | Incyte vs. Apellis Pharmaceuticals |
| Illumina vs. Nuvation Bio | Illumina vs. Lyell Immunopharma | Illumina vs. Century Therapeutics | Illumina vs. Generation BioCo |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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