Correlation Between Ammo and XOMA
Can any of the company-specific risk be diversified away by investing in both Ammo 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 Ammo and XOMA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ammo Inc and XOMA Corporation, you can compare the effects of market volatilities on Ammo 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 Ammo with a short position of XOMA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ammo and XOMA.
Diversification Opportunities for Ammo and XOMA
Pay attention - limited upside
The 3 months correlation between Ammo and XOMA is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Ammo Inc and XOMA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA and Ammo 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 Ammo Inc 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 Ammo i.e., Ammo and XOMA go up and down completely randomly.
Pair Corralation between Ammo and XOMA
Given the investment horizon of 90 days Ammo Inc is expected to generate 31.03 times more return on investment than XOMA. However, Ammo is 31.03 times more volatile than XOMA Corporation. It trades about 0.03 of its potential returns per unit of risk. XOMA Corporation is currently generating about -0.38 per unit of risk. If you would invest 121.00 in Ammo Inc on August 28, 2024 and sell it today you would earn a total of 1.00 from holding Ammo Inc or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ammo Inc vs. XOMA Corp.
Performance |
| Timeline |
| Ammo Inc |
| XOMA |
Ammo and XOMA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ammo and XOMA
The main advantage of trading using opposite Ammo and XOMA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ammo 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.| Ammo vs. Sturm Ruger | Ammo vs. Kratos Defense Security | Ammo vs. VSE Corporation | Ammo vs. Smith Wesson Brands |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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