Correlation Between New York and XOMA

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

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

Diversification Opportunities for New York and XOMA

0.76

Correlation Coefficient

New York  XOMA

Poor diversification

The 3 months correlation between New and XOMA is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding New York Mortgage and XOMA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XOMA and New York 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 New York Mortgage are associated (or correlated) with XOMA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XOMA has no effect on the direction of New York i.e., New York and XOMA go up and down completely randomly.

Pair Corralation between New York and XOMA

Assuming the 90 days horizon New York Mortgage is expected to generate 1.13 times more return on investment than XOMA. However, New York is 1.13 times more volatile than XOMA Corporation. It trades about 0.08 of its potential returns per unit of risk. XOMA Corporation is currently generating about 0.05 per unit of risk. If you would invest  1,683  in New York Mortgage on September 3, 2024 and sell it today you would earn a total of  831.00  from holding New York Mortgage or generate 49.38% return on investment over 90 days.

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

New York Mortgage  vs.  XOMA Corp.

New York Mortgage

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in New York Mortgage are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, New York may actually be approaching a critical reversion point that can send shares even higher in January 2025.

XOMA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, XOMA is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with New York and XOMA

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

The idea behind New York Mortgage and XOMA Corporation 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..