Correlation Between Erasca and XBiotech
Can any of the company-specific risk be diversified away by investing in both Erasca and XBiotech 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 Erasca and XBiotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Erasca Inc and XBiotech, you can compare the effects of market volatilities on Erasca and XBiotech 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 Erasca with a short position of XBiotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Erasca and XBiotech.
Diversification Opportunities for Erasca and XBiotech
Good diversification
The 3 months correlation between Erasca and XBiotech is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Erasca Inc and XBiotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBiotech and Erasca 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 Erasca Inc are associated (or correlated) with XBiotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBiotech has no effect on the direction of Erasca i.e., Erasca and XBiotech go up and down completely randomly.
Pair Corralation between Erasca and XBiotech
Given the investment horizon of 90 days Erasca Inc is expected to generate 1.34 times more return on investment than XBiotech. However, Erasca is 1.34 times more volatile than XBiotech. It trades about -0.03 of its potential returns per unit of risk. XBiotech is currently generating about -0.12 per unit of risk. If you would invest 311.00 in Erasca Inc on September 12, 2024 and sell it today you would lose (15.00) from holding Erasca Inc or give up 4.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Erasca Inc vs. XBiotech
Performance |
| Timeline |
| Erasca Inc |
| XBiotech |
Erasca and XBiotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Erasca and XBiotech
The main advantage of trading using opposite Erasca and XBiotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Erasca position performs unexpectedly, XBiotech 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 XBiotech will offset losses from the drop in XBiotech's long position.| Erasca vs. Century Therapeutics | Erasca vs. Keros Therapeutics | Erasca vs. Monte Rosa Therapeutics | Erasca vs. Design Therapeutics |
| XBiotech vs. Equillium | XBiotech vs. DiaMedica Therapeutics | XBiotech vs. Valneva SE ADR | XBiotech vs. Vivani Medical |
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 Stocks Directory module to find actively traded stocks across global markets.
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