Correlation Between Franchise and XOMA Corp
Can any of the company-specific risk be diversified away by investing in both Franchise and XOMA Corp 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 Franchise and XOMA Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franchise Group and XOMA Corp, you can compare the effects of market volatilities on Franchise and XOMA Corp 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 Franchise with a short position of XOMA Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franchise and XOMA Corp.
Diversification Opportunities for Franchise and XOMA Corp
Poor diversification
The 3 months correlation between Franchise and XOMA is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Franchise Group and XOMA Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA Corp and Franchise 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 Franchise Group are associated (or correlated) with XOMA Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA Corp has no effect on the direction of Franchise i.e., Franchise and XOMA Corp go up and down completely randomly.
Pair Corralation between Franchise and XOMA Corp
If you would invest 2,493 in Franchise Group on August 25, 2024 and sell it today you would earn a total of 0.00 from holding Franchise Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Franchise Group vs. XOMA Corp
Performance |
| Timeline |
| Franchise Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| XOMA Corp |
Franchise and XOMA Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franchise and XOMA Corp
The main advantage of trading using opposite Franchise and XOMA Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franchise position performs unexpectedly, XOMA Corp 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 Corp will offset losses from the drop in XOMA Corp's long position.| Franchise vs. Maiden Holdings | Franchise vs. Nasdaq Inc | Franchise vs. Sun Life Financial | Franchise vs. Sabra Healthcare REIT |
| XOMA Corp vs. Harrow Health 8625 | XOMA Corp vs. SiriusPoint | XOMA Corp vs. New York Mortgage | XOMA Corp vs. Sachem Capital Corp |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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