Correlation Between Caribou Biosciences and Xencor

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

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

Diversification Opportunities for Caribou Biosciences and Xencor

0.23

Correlation Coefficient

Caribou Biosciences  Xencor

Modest diversification

The 3 months correlation between Caribou and Xencor is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Caribou Biosciences and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Caribou Biosciences 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 Caribou Biosciences are associated (or correlated) with Xencor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xencor Inc has no effect on the direction of Caribou Biosciences i.e., Caribou Biosciences and Xencor go up and down completely randomly.

Pair Corralation between Caribou Biosciences and Xencor

Given the investment horizon of 90 days Caribou Biosciences is expected to under-perform the Xencor. In addition to that, Caribou Biosciences is 2.46 times more volatile than Xencor Inc. It trades about -0.04 of its total potential returns per unit of risk. Xencor Inc is currently generating about 0.17 per unit of volatility. If you would invest  2,101  in Xencor Inc on October 1, 2024 and sell it today you would earn a total of  328.00  from holding Xencor Inc or generate 15.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	97.62%
Values	Daily Returns

Caribou Biosciences  vs.  Xencor Inc

Caribou Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caribou Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, Caribou Biosciences is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Xencor Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xencor Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak fundamental indicators, Xencor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Caribou Biosciences and Xencor

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

The idea behind Caribou Biosciences and Xencor 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.

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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..