Correlation Between New York and XOMA Corp
Can any of the company-specific risk be diversified away by investing in both New York 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 New York and XOMA Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New York Mortgage and XOMA Corp, you can compare the effects of market volatilities on New York 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 New York with a short position of XOMA Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of New York and XOMA Corp.
Diversification Opportunities for New York and XOMA Corp
Very poor diversification
The 3 months correlation between New and XOMA is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and XOMA Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA Corp and New York 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 New York Mortgage 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 New York i.e., New York and XOMA Corp go up and down completely randomly.
Pair Corralation between New York and XOMA Corp
Assuming the 90 days horizon New York Mortgage is expected to generate 0.97 times more return on investment than XOMA Corp. However, New York Mortgage is 1.03 times less risky than XOMA Corp. It trades about 0.08 of its potential returns per unit of risk. XOMA Corp is currently generating about 0.05 per unit of risk. If you would invest 1,724 in New York Mortgage on August 24, 2024 and sell it today you would earn a total of 773.00 from holding New York Mortgage or generate 44.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New York Mortgage vs. XOMA Corp
Performance |
| Timeline |
| New York Mortgage |
| XOMA Corp |
New York and XOMA Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New York and XOMA Corp
The main advantage of trading using opposite New York and XOMA Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New York 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.| New York vs. New York Mortgage | New York vs. AGNC Investment Corp | New York vs. Chimera Investment | New York vs. AGNC Investment Corp |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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