Correlation Between Inovio Pharmaceuticals and Minerva Neurosciences

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

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

Diversification Opportunities for Inovio Pharmaceuticals and Minerva Neurosciences

-0.67

Correlation Coefficient

Inovio Pharmaceuticals  Minerva Neurosciences

Excellent diversification

The 3 months correlation between Inovio and Minerva is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Inovio Pharmaceuticals and Minerva Neurosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minerva Neurosciences and Inovio Pharmaceuticals 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 Inovio Pharmaceuticals are associated (or correlated) with Minerva Neurosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minerva Neurosciences has no effect on the direction of Inovio Pharmaceuticals i.e., Inovio Pharmaceuticals and Minerva Neurosciences go up and down completely randomly.

Pair Corralation between Inovio Pharmaceuticals and Minerva Neurosciences

Considering the 90-day investment horizon Inovio Pharmaceuticals is expected to under-perform the Minerva Neurosciences. But the stock apears to be less risky and, when comparing its historical volatility, Inovio Pharmaceuticals is 1.76 times less risky than Minerva Neurosciences. The stock trades about -0.01 of its potential returns per unit of risk. The Minerva Neurosciences is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  345.00  in Minerva Neurosciences on March 28, 2024 and sell it today you would lose (27.00) from holding Minerva Neurosciences or give up 7.83% of portfolio value over 90 days.

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

Inovio Pharmaceuticals  vs.  Minerva Neurosciences

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 July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Minerva Neurosciences

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Minerva Neurosciences are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Minerva Neurosciences showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Inovio Pharmaceuticals and Minerva Neurosciences

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

The idea behind Inovio Pharmaceuticals and Minerva Neurosciences 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.