Correlation Between XOMA and Ammo
Can any of the company-specific risk be diversified away by investing in both XOMA and Ammo 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 Ammo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XOMA Corporation and Ammo Inc, you can compare the effects of market volatilities on XOMA and Ammo 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 Ammo. Check out your portfolio center. Please also check ongoing floating volatility patterns of XOMA and Ammo.
Diversification Opportunities for XOMA and Ammo
Pay attention - limited upside
The 3 months correlation between XOMA and Ammo is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp. and Ammo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ammo Inc 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 Ammo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ammo Inc has no effect on the direction of XOMA i.e., XOMA and Ammo go up and down completely randomly.
Pair Corralation between XOMA and Ammo
Assuming the 90 days horizon XOMA Corporation is expected to under-perform the Ammo. But the preferred stock apears to be less risky and, when comparing its historical volatility, XOMA Corporation is 31.03 times less risky than Ammo. The preferred stock trades about -0.38 of its potential returns per unit of risk. The Ammo Inc is currently generating about 0.03 of returns per unit of risk over similar time horizon. 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 |
XOMA Corp. vs. Ammo Inc
Performance |
| Timeline |
| XOMA |
| Ammo Inc |
XOMA and Ammo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XOMA and Ammo
The main advantage of trading using opposite XOMA and Ammo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA position performs unexpectedly, Ammo 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 Ammo will offset losses from the drop in Ammo's long position.The idea behind XOMA Corporation and Ammo Inc 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.| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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