Correlation Between XBiotech and Dow Jones
Can any of the company-specific risk be diversified away by investing in both XBiotech and Dow Jones 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 XBiotech and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XBiotech and Dow Jones Industrial, you can compare the effects of market volatilities on XBiotech and Dow Jones 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 XBiotech with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of XBiotech and Dow Jones.
Diversification Opportunities for XBiotech and Dow Jones
Weak diversification
The 3 months correlation between XBiotech and Dow is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding XBiotech and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and XBiotech 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 XBiotech are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of XBiotech i.e., XBiotech and Dow Jones go up and down completely randomly.
Pair Corralation between XBiotech and Dow Jones
Given the investment horizon of 90 days XBiotech is expected to generate 7.3 times more return on investment than Dow Jones. However, XBiotech is 7.3 times more volatile than Dow Jones Industrial. It trades about 0.07 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.13 per unit of risk. If you would invest 418.00 in XBiotech on September 2, 2024 and sell it today you would earn a total of 343.00 from holding XBiotech or generate 82.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XBiotech vs. Dow Jones Industrial
Performance |
| Timeline |
XBiotech and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
XBiotech
Pair trading matchups for XBiotech
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with XBiotech and Dow Jones
The main advantage of trading using opposite XBiotech and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XBiotech position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| XBiotech vs. Tff Pharmaceuticals | XBiotech vs. Eliem Therapeutics | XBiotech vs. Inhibrx | XBiotech vs. Enliven Therapeutics |
| Dow Jones vs. Dream Finders Homes | Dow Jones vs. GEN Restaurant Group, | Dow Jones vs. National Beverage Corp | Dow Jones vs. BJs Restaurants |
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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