Correlation Between Kodiak Sciences and Xencor

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

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

Diversification Opportunities for Kodiak Sciences and Xencor

0.97

Correlation Coefficient

Kodiak Sciences  Xencor

Almost no diversification

The 3 months correlation between Kodiak and Xencor is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Kodiak Sciences and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Kodiak Sciences 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 Kodiak Sciences 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 Kodiak Sciences i.e., Kodiak Sciences and Xencor go up and down completely randomly.

Pair Corralation between Kodiak Sciences and Xencor

Considering the 90-day investment horizon Kodiak Sciences is expected to under-perform the Xencor. In addition to that, Kodiak Sciences is 2.07 times more volatile than Xencor Inc. It trades about -0.27 of its total potential returns per unit of risk. Xencor Inc is currently generating about -0.34 per unit of volatility. If you would invest  2,457  in Xencor Inc on December 21, 2024 and sell it today you would lose (1,110) from holding Xencor Inc or give up 45.18% of portfolio value over 90 days.

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

Kodiak Sciences  vs.  Xencor Inc

Kodiak Sciences

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kodiak Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Xencor Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xencor Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Kodiak Sciences and Xencor

The main advantage of trading using opposite Kodiak Sciences and Xencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kodiak Sciences 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 Kodiak Sciences 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.