Correlation Between Celldex Therapeutics and Xilio Development

Can any of the company-specific risk be diversified away by investing in both Celldex Therapeutics and Xilio Development 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 Celldex Therapeutics and Xilio Development into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Celldex Therapeutics and Xilio Development, you can compare the effects of market volatilities on Celldex Therapeutics and Xilio Development 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 Celldex Therapeutics with a short position of Xilio Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Celldex Therapeutics and Xilio Development.

Diversification Opportunities for Celldex Therapeutics and Xilio Development

-0.62

Correlation Coefficient

Celldex Therapeutics  Xilio Development

Excellent diversification

The 3 months correlation between Celldex and Xilio is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Celldex Therapeutics and Xilio Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xilio Development and Celldex Therapeutics 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 Celldex Therapeutics are associated (or correlated) with Xilio Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xilio Development has no effect on the direction of Celldex Therapeutics i.e., Celldex Therapeutics and Xilio Development go up and down completely randomly.

Pair Corralation between Celldex Therapeutics and Xilio Development

Given the investment horizon of 90 days Celldex Therapeutics is expected to generate 17.83 times less return on investment than Xilio Development. But when comparing it to its historical volatility, Celldex Therapeutics is 2.33 times less risky than Xilio Development. It trades about 0.01 of its potential returns per unit of risk. Xilio Development is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  108.00  in Xilio Development on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Xilio Development or generate 18.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Celldex Therapeutics  vs.  Xilio Development

Celldex Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celldex Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Xilio Development

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xilio Development are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak essential indicators, Xilio Development displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Celldex Therapeutics and Xilio Development

The main advantage of trading using opposite Celldex Therapeutics and Xilio Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Celldex Therapeutics position performs unexpectedly, Xilio Development 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 Xilio Development will offset losses from the drop in Xilio Development's long position.

The idea behind Celldex Therapeutics and Xilio Development 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.