Correlation Between Gossamer Bio and Xilio Development

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

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

Diversification Opportunities for Gossamer Bio and Xilio Development

0.03

Correlation Coefficient

Gossamer Bio  Xilio Development

Significant diversification

The 3 months correlation between Gossamer and Xilio is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Gossamer Bio and Xilio Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xilio Development and Gossamer Bio 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 Gossamer Bio 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 Gossamer Bio i.e., Gossamer Bio and Xilio Development go up and down completely randomly.

Pair Corralation between Gossamer Bio and Xilio Development

Given the investment horizon of 90 days Gossamer Bio is expected to generate 0.85 times more return on investment than Xilio Development. However, Gossamer Bio is 1.18 times less risky than Xilio Development. It trades about 0.0 of its potential returns per unit of risk. Xilio Development is currently generating about 0.0 per unit of risk. If you would invest  238.00  in Gossamer Bio on October 21, 2024 and sell it today you would lose (142.00) from holding Gossamer Bio or give up 59.66% of portfolio value over 90 days.

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

Gossamer Bio  vs.  Xilio Development

Gossamer Bio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Gossamer Bio are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Gossamer Bio unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xilio Development

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xilio Development are ranked lower than 7 (%) 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 Gossamer Bio and Xilio Development

The main advantage of trading using opposite Gossamer Bio and Xilio Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gossamer Bio 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 Gossamer Bio 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.