Correlation Between XOMA Corp and Sachem Capital
Can any of the company-specific risk be diversified away by investing in both XOMA Corp and Sachem Capital 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 Sachem Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XOMA Corp and Sachem Capital Corp, you can compare the effects of market volatilities on XOMA Corp and Sachem Capital 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 Sachem Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of XOMA Corp and Sachem Capital.
Diversification Opportunities for XOMA Corp and Sachem Capital
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XOMA and Sachem is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp and Sachem Capital Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sachem Capital Corp 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 Sachem Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sachem Capital Corp has no effect on the direction of XOMA Corp i.e., XOMA Corp and Sachem Capital go up and down completely randomly.
Pair Corralation between XOMA Corp and Sachem Capital
Assuming the 90 days horizon XOMA Corp is expected to generate 11.49 times less return on investment than Sachem Capital. But when comparing it to its historical volatility, XOMA Corp is 4.99 times less risky than Sachem Capital. It trades about 0.12 of its potential returns per unit of risk. Sachem Capital Corp is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 1,599 in Sachem Capital Corp on November 2, 2024 and sell it today you would earn a total of 217.00 from holding Sachem Capital Corp or generate 13.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XOMA Corp vs. Sachem Capital Corp
Performance |
| Timeline |
| XOMA Corp |
| Sachem Capital Corp |
XOMA Corp and Sachem Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XOMA Corp and Sachem Capital
The main advantage of trading using opposite XOMA Corp and Sachem Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XOMA Corp position performs unexpectedly, Sachem Capital 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 Sachem Capital will offset losses from the drop in Sachem Capital's long position.The idea behind XOMA Corp and Sachem Capital Corp 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.| Sachem Capital vs. SiriusPoint | Sachem Capital vs. Harrow Health 8625 | Sachem Capital vs. XOMA Corporation | Sachem Capital vs. New York Mortgage |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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