Correlation Between XOMA and Aileron Therapeutics
Can any of the company-specific risk be diversified away by investing in both XOMA and Aileron 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 and Aileron Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XOMA Corporation and Aileron Therapeutics, you can compare the effects of market volatilities on XOMA and Aileron 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 with a short position of Aileron Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of XOMA and Aileron Therapeutics.
Diversification Opportunities for XOMA and Aileron Therapeutics
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XOMA and Aileron is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and Aileron Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aileron Therapeutics and XOMA 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 Corporation are associated (or correlated) with Aileron Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aileron Therapeutics has no effect on the direction of XOMA i.e., XOMA and Aileron Therapeutics go up and down completely randomly.
Pair Corralation between XOMA and Aileron Therapeutics
Assuming the 90 days horizon XOMA Corporation is expected to generate 0.04 times more return on investment than Aileron Therapeutics. However, XOMA Corporation is 28.0 times less risky than Aileron Therapeutics. It trades about -0.26 of its potential returns per unit of risk. Aileron Therapeutics is currently generating about -0.31 per unit of risk. If you would invest 2,563 in XOMA Corporation on September 3, 2024 and sell it today you would lose (24.00) from holding XOMA Corporation or give up 0.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XOMA Corp. vs. Aileron Therapeutics
Performance |
| Timeline |
| XOMA |
| Aileron Therapeutics |
XOMA and Aileron Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XOMA and Aileron Therapeutics
The main advantage of trading using opposite XOMA and Aileron Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA position performs unexpectedly, Aileron 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 Aileron Therapeutics will offset losses from the drop in Aileron Therapeutics' long position.The idea behind XOMA Corporation and Aileron Therapeutics pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Aileron Therapeutics vs. Bio Path Holdings | Aileron Therapeutics vs. Benitec Biopharma Ltd | Aileron Therapeutics vs. Artelo Biosciences | Aileron Therapeutics vs. Histogen |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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