Correlation Between Ford and Xencor
Can any of the company-specific risk be diversified away by investing in both Ford and Xencor 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 Ford and Xencor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Xencor Inc, you can compare the effects of market volatilities on Ford and Xencor 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 Ford with a short position of Xencor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Xencor.
Diversification Opportunities for Ford and Xencor
Modest diversification
The 3 months correlation between Ford and Xencor is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Ford 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 Ford Motor are associated (or correlated) with Xencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xencor Inc has no effect on the direction of Ford i.e., Ford and Xencor go up and down completely randomly.
Pair Corralation between Ford and Xencor
Taking into account the 90-day investment horizon Ford is expected to generate 10.61 times less return on investment than Xencor. In addition to that, Ford is 1.54 times more volatile than Xencor Inc. It trades about 0.03 of its total potential returns per unit of risk. Xencor Inc is currently generating about 0.44 per unit of volatility. If you would invest 2,116 in Xencor Inc on August 25, 2024 and sell it today you would earn a total of 385.00 from holding Xencor Inc or generate 18.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Xencor Inc
Performance |
| Timeline |
| Ford Motor |
| Xencor Inc |
Ford and Xencor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Xencor
The main advantage of trading using opposite Ford and Xencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford position performs unexpectedly, Xencor 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 Xencor will offset losses from the drop in Xencor's long position.The idea behind Ford Motor and Xencor Inc 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.| Xencor vs. Edgewise Therapeutics | Xencor vs. Keros Therapeutics | Xencor vs. Monte Rosa Therapeutics | Xencor vs. Mineralys Therapeutics, Common |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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