Correlation Between XOMA Corp and Edgewise Therapeutics
Can any of the company-specific risk be diversified away by investing in both XOMA Corp and Edgewise Therapeutics 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 XOMA Corp and Edgewise Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XOMA Corp and Edgewise Therapeutics, you can compare the effects of market volatilities on XOMA Corp and Edgewise Therapeutics 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 XOMA Corp with a short position of Edgewise Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of XOMA Corp and Edgewise Therapeutics.
Diversification Opportunities for XOMA Corp and Edgewise Therapeutics
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between XOMA and Edgewise is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp and Edgewise Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgewise Therapeutics and XOMA Corp 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 XOMA Corp are associated (or correlated) with Edgewise Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgewise Therapeutics has no effect on the direction of XOMA Corp i.e., XOMA Corp and Edgewise Therapeutics go up and down completely randomly.
Pair Corralation between XOMA Corp and Edgewise Therapeutics
Given the investment horizon of 90 days XOMA Corp is expected to under-perform the Edgewise Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, XOMA Corp is 1.18 times less risky than Edgewise Therapeutics. The stock trades about -0.25 of its potential returns per unit of risk. The Edgewise Therapeutics is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest 2,780 in Edgewise Therapeutics on November 29, 2024 and sell it today you would lose (272.00) from holding Edgewise Therapeutics or give up 9.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XOMA Corp vs. Edgewise Therapeutics
Performance |
| Timeline |
| XOMA Corp |
| Edgewise Therapeutics |
XOMA Corp and Edgewise Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XOMA Corp and Edgewise Therapeutics
The main advantage of trading using opposite XOMA Corp and Edgewise Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA Corp position performs unexpectedly, Edgewise Therapeutics 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 Edgewise Therapeutics will offset losses from the drop in Edgewise Therapeutics' long position.| XOMA Corp vs. Werewolf Therapeutics | XOMA Corp vs. Edgewise Therapeutics | XOMA Corp vs. Celcuity LLC | XOMA Corp vs. C4 Therapeutics |
| Edgewise Therapeutics vs. Century Therapeutics | Edgewise Therapeutics vs. C4 Therapeutics | Edgewise Therapeutics vs. Mineralys Therapeutics, Common | Edgewise Therapeutics vs. Cullinan Oncology LLC |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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