Correlation Between Fortress Biotech and XOMA
Can any of the company-specific risk be diversified away by investing in both Fortress Biotech 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 Fortress Biotech and XOMA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fortress Biotech Pref and XOMA Corporation, you can compare the effects of market volatilities on Fortress Biotech 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 Fortress Biotech with a short position of XOMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fortress Biotech and XOMA.
Diversification Opportunities for Fortress Biotech and XOMA
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Fortress and XOMA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Fortress Biotech Pref and XOMA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA and Fortress Biotech 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 Fortress Biotech Pref 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 Fortress Biotech i.e., Fortress Biotech and XOMA go up and down completely randomly.
Pair Corralation between Fortress Biotech and XOMA
Assuming the 90 days horizon Fortress Biotech Pref is expected to under-perform the XOMA. In addition to that, Fortress Biotech is 4.95 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 0.05 per unit of volatility. If you would invest 2,025 in XOMA Corporation on August 24, 2024 and sell it today you would earn a total of 500.00 from holding XOMA Corporation or generate 24.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fortress Biotech Pref vs. XOMA Corp.
Performance |
| Timeline |
| Fortress Biotech Pref |
| XOMA |
Fortress Biotech and XOMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fortress Biotech and XOMA
The main advantage of trading using opposite Fortress Biotech and XOMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fortress Biotech 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.| Fortress Biotech vs. Checkpoint Therapeutics | Fortress Biotech vs. Mustang Bio | Fortress Biotech vs. Reviva Pharmaceuticals Holdings | Fortress Biotech vs. Kodiak Sciences |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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