Correlation Between Ammo and XOMA Corp
Can any of the company-specific risk be diversified away by investing in both Ammo 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 Ammo and XOMA Corp 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 Corp, you can compare the effects of market volatilities on Ammo 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 Ammo with a short position of XOMA Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ammo and XOMA Corp.
Diversification Opportunities for Ammo and XOMA Corp
Poor diversification
The 3 months correlation between Ammo and XOMA is 0.67. 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 Corp 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 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 Ammo i.e., Ammo and XOMA Corp go up and down completely randomly.
Pair Corralation between Ammo and XOMA Corp
Given the investment horizon of 90 days Ammo Inc is expected to generate 3.65 times more return on investment than XOMA Corp. However, Ammo is 3.65 times more volatile than XOMA Corp. It trades about 0.02 of its potential returns per unit of risk. XOMA Corp is currently generating about 0.04 per unit of risk. If you would invest 195.00 in Ammo Inc on November 19, 2024 and sell it today you would lose (11.00) from holding Ammo Inc or give up 5.64% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ammo Inc vs. XOMA Corp
Performance |
| Timeline |
| Ammo Inc |
| XOMA Corp |
Ammo and XOMA Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ammo and XOMA Corp
The main advantage of trading using opposite Ammo and XOMA Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ammo 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.| 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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