Correlation Between CytomX Therapeutics and Fortress Biotech

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

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

Diversification Opportunities for CytomX Therapeutics and Fortress Biotech

0.37

Correlation Coefficient

CytomX Therapeutics  Fortress Biotech

Weak diversification

The 3 months correlation between CytomX and Fortress is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding CytomX Therapeutics and Fortress Biotech Pref in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fortress Biotech Pref and CytomX 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 CytomX Therapeutics are associated (or correlated) with Fortress Biotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fortress Biotech Pref has no effect on the direction of CytomX Therapeutics i.e., CytomX Therapeutics and Fortress Biotech go up and down completely randomly.

Pair Corralation between CytomX Therapeutics and Fortress Biotech

Given the investment horizon of 90 days CytomX Therapeutics is expected to under-perform the Fortress Biotech. In addition to that, CytomX Therapeutics is 1.08 times more volatile than Fortress Biotech Pref. It trades about -0.01 of its total potential returns per unit of risk. Fortress Biotech Pref is currently generating about 0.09 per unit of volatility. If you would invest  592.00  in Fortress Biotech Pref on September 16, 2024 and sell it today you would earn a total of  106.00  from holding Fortress Biotech Pref or generate 17.91% return on investment over 90 days.

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

CytomX Therapeutics  vs.  Fortress Biotech Pref

CytomX Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CytomX Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong primary indicators, CytomX Therapeutics is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Fortress Biotech Pref

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fortress Biotech Pref are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Fortress Biotech reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CytomX Therapeutics and Fortress Biotech

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

The idea behind CytomX Therapeutics and Fortress Biotech Pref 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 Global Correlations module to find global opportunities by holding instruments from different markets.