Correlation Between BioCardia and Xenon Pharmaceuticals
Can any of the company-specific risk be diversified away by investing in both BioCardia and Xenon 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 BioCardia and Xenon Pharmaceuticals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BioCardia and Xenon Pharmaceuticals, you can compare the effects of market volatilities on BioCardia and Xenon 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 BioCardia with a short position of Xenon Pharmaceuticals. Check out your portfolio center. Please also check ongoing floating volatility patterns of BioCardia and Xenon Pharmaceuticals.
Diversification Opportunities for BioCardia and Xenon Pharmaceuticals
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between BioCardia and Xenon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding BioCardia and Xenon Pharmaceuticals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xenon Pharmaceuticals and BioCardia 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 BioCardia are associated (or correlated) with Xenon Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xenon Pharmaceuticals has no effect on the direction of BioCardia i.e., BioCardia and Xenon Pharmaceuticals go up and down completely randomly.
Pair Corralation between BioCardia and Xenon Pharmaceuticals
Assuming the 90 days horizon BioCardia is expected to generate 32.92 times more return on investment than Xenon Pharmaceuticals. However, BioCardia is 32.92 times more volatile than Xenon Pharmaceuticals. It trades about 0.08 of its potential returns per unit of risk. Xenon Pharmaceuticals is currently generating about 0.01 per unit of risk. If you would invest 73.00 in BioCardia on November 2, 2024 and sell it today you would lose (73.00) from holding BioCardia or give up 100.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 43.32% |
| Values | Daily Returns |
BioCardia vs. Xenon Pharmaceuticals
Performance |
| Timeline |
| BioCardia |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xenon Pharmaceuticals |
BioCardia and Xenon Pharmaceuticals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BioCardia and Xenon Pharmaceuticals
The main advantage of trading using opposite BioCardia and Xenon Pharmaceuticals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BioCardia position performs unexpectedly, Xenon 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 Xenon Pharmaceuticals will offset losses from the drop in Xenon Pharmaceuticals' long position.The idea behind BioCardia and Xenon 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.| Xenon Pharmaceuticals vs. Nuvalent | Xenon Pharmaceuticals vs. Arcellx | Xenon Pharmaceuticals vs. Vaxcyte | Xenon Pharmaceuticals vs. Viridian Therapeutics |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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