Correlation Between Equillium and Xencor

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

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

Diversification Opportunities for Equillium and Xencor

-0.59

Correlation Coefficient

Equillium  Xencor

Excellent diversification

The 3 months correlation between Equillium and Xencor is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Equillium and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Equillium 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 Equillium 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 Equillium i.e., Equillium and Xencor go up and down completely randomly.

Pair Corralation between Equillium and Xencor

Allowing for the 90-day total investment horizon Equillium is expected to generate 2.24 times more return on investment than Xencor. However, Equillium is 2.24 times more volatile than Xencor Inc. It trades about 0.02 of its potential returns per unit of risk. Xencor Inc is currently generating about 0.0 per unit of risk. If you would invest  110.00  in Equillium on October 4, 2024 and sell it today you would lose (35.00) from holding Equillium or give up 31.82% of portfolio value over 90 days.

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

Equillium  vs.  Xencor Inc

Equillium

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Equillium are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Equillium may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xencor Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xencor Inc are ranked lower than 9 (%) 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 Equillium and Xencor

The main advantage of trading using opposite Equillium and Xencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Equillium 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 Equillium 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.