Correlation Between Edgewise Therapeutics and XOMA
Can any of the company-specific risk be diversified away by investing in both Edgewise Therapeutics and XOMA 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 Edgewise Therapeutics and XOMA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Edgewise Therapeutics and XOMA Corporation, you can compare the effects of market volatilities on Edgewise Therapeutics and XOMA 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 Edgewise Therapeutics with a short position of XOMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Edgewise Therapeutics and XOMA.
Diversification Opportunities for Edgewise Therapeutics and XOMA
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Edgewise and XOMA is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Edgewise Therapeutics and XOMA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA and Edgewise Therapeutics 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 Edgewise Therapeutics are associated (or correlated) with XOMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA has no effect on the direction of Edgewise Therapeutics i.e., Edgewise Therapeutics and XOMA go up and down completely randomly.
Pair Corralation between Edgewise Therapeutics and XOMA
Given the investment horizon of 90 days Edgewise Therapeutics is expected to under-perform the XOMA. In addition to that, Edgewise Therapeutics is 13.41 times more volatile than XOMA Corporation. It trades about -0.02 of its total potential returns per unit of risk. XOMA Corporation is currently generating about -0.21 per unit of volatility. If you would invest 2,560 in XOMA Corporation on September 1, 2024 and sell it today you would lose (21.00) from holding XOMA Corporation or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Edgewise Therapeutics vs. XOMA Corp.
Performance |
| Timeline |
| Edgewise Therapeutics |
| XOMA |
Edgewise Therapeutics and XOMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Edgewise Therapeutics and XOMA
The main advantage of trading using opposite Edgewise Therapeutics and XOMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Edgewise Therapeutics position performs unexpectedly, XOMA 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 XOMA will offset losses from the drop in XOMA's long position.| Edgewise Therapeutics vs. Tff Pharmaceuticals | Edgewise Therapeutics vs. Eliem Therapeutics | Edgewise Therapeutics vs. Inhibrx | Edgewise Therapeutics vs. Enliven 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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