Correlation Between Bolt Biotherapeutics and Inovio Pharmaceuticals

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

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

Diversification Opportunities for Bolt Biotherapeutics and Inovio Pharmaceuticals

0.85

Correlation Coefficient

Bolt Biotherapeutics  Inovio Pharmaceuticals

Very poor diversification

The 3 months correlation between Bolt and Inovio is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Bolt Biotherapeutics and Inovio Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inovio Pharmaceuticals and Bolt Biotherapeutics 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 Bolt Biotherapeutics are associated (or correlated) with Inovio Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inovio Pharmaceuticals has no effect on the direction of Bolt Biotherapeutics i.e., Bolt Biotherapeutics and Inovio Pharmaceuticals go up and down completely randomly.

Pair Corralation between Bolt Biotherapeutics and Inovio Pharmaceuticals

Given the investment horizon of 90 days Bolt Biotherapeutics is expected to under-perform the Inovio Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Bolt Biotherapeutics is 1.43 times less risky than Inovio Pharmaceuticals. The stock trades about -0.02 of its potential returns per unit of risk. The Inovio Pharmaceuticals is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  1,872  in Inovio Pharmaceuticals on June 30, 2024 and sell it today you would lose (1,286) from holding Inovio Pharmaceuticals or give up 68.7% of portfolio value over 90 days.

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

Bolt Biotherapeutics  vs.  Inovio Pharmaceuticals

Bolt Biotherapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bolt Biotherapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's essential indicators remain comparatively stable which may send shares a bit higher in October 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Inovio Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Inovio Pharmaceuticals 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 very healthy which may send shares a bit higher in October 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Bolt Biotherapeutics and Inovio Pharmaceuticals

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

The idea behind Bolt Biotherapeutics and Inovio 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.