Correlation Between Seres Therapeutics and XBiotech
Can any of the company-specific risk be diversified away by investing in both Seres Therapeutics 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 Seres Therapeutics and XBiotech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seres Therapeutics and XBiotech, you can compare the effects of market volatilities on Seres Therapeutics 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 Seres Therapeutics with a short position of XBiotech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seres Therapeutics and XBiotech.
Diversification Opportunities for Seres Therapeutics and XBiotech
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Seres and XBiotech is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Seres Therapeutics and XBiotech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBiotech and Seres 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 Seres Therapeutics 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 Seres Therapeutics i.e., Seres Therapeutics and XBiotech go up and down completely randomly.
Pair Corralation between Seres Therapeutics and XBiotech
Given the investment horizon of 90 days Seres Therapeutics is expected to generate 1.83 times more return on investment than XBiotech. However, Seres Therapeutics is 1.83 times more volatile than XBiotech. It trades about 0.12 of its potential returns per unit of risk. XBiotech is currently generating about 0.0 per unit of risk. If you would invest 81.00 in Seres Therapeutics on September 4, 2024 and sell it today you would earn a total of 12.00 from holding Seres Therapeutics or generate 14.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Seres Therapeutics vs. XBiotech
Performance |
| Timeline |
| Seres Therapeutics |
| XBiotech |
Seres Therapeutics and XBiotech Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Seres Therapeutics and XBiotech
The main advantage of trading using opposite Seres Therapeutics and XBiotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seres Therapeutics 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.| Seres Therapeutics vs. Candel Therapeutics | Seres Therapeutics vs. Cingulate Warrants | Seres Therapeutics vs. Unicycive Therapeutics | Seres Therapeutics vs. Quoin Pharmaceuticals Ltd |
| XBiotech vs. Generation Bio Co | XBiotech vs. Kronos Bio | XBiotech vs. Erasca Inc | XBiotech vs. C4 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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