Correlation Between Vaxcyte and Xencor

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

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

Diversification Opportunities for Vaxcyte and Xencor

-0.82

Correlation Coefficient

Vaxcyte  Xencor

Pay attention - limited upside

The 3 months correlation between Vaxcyte and Xencor is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Vaxcyte and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Vaxcyte 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 Vaxcyte 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 Vaxcyte i.e., Vaxcyte and Xencor go up and down completely randomly.

Pair Corralation between Vaxcyte and Xencor

Given the investment horizon of 90 days Vaxcyte is expected to generate 0.94 times more return on investment than Xencor. However, Vaxcyte is 1.06 times less risky than Xencor. It trades about 0.06 of its potential returns per unit of risk. Xencor Inc is currently generating about 0.02 per unit of risk. If you would invest  4,787  in Vaxcyte on October 4, 2024 and sell it today you would earn a total of  3,545  from holding Vaxcyte or generate 74.05% return on investment over 90 days.

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

Vaxcyte  vs.  Xencor Inc

Vaxcyte

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vaxcyte has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

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 Vaxcyte and Xencor

The main advantage of trading using opposite Vaxcyte and Xencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vaxcyte 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 Vaxcyte 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 CEOs Directory module to screen CEOs from public companies around the world.