Correlation Between Oncology Institute and Xencor

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

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

Diversification Opportunities for Oncology Institute and Xencor

-0.81

Correlation Coefficient

Oncology Institute  Xencor

Pay attention - limited upside

The 3 months correlation between Oncology and Xencor is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Oncology Institute and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Oncology Institute 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 Oncology Institute 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 Oncology Institute i.e., Oncology Institute and Xencor go up and down completely randomly.

Pair Corralation between Oncology Institute and Xencor

Considering the 90-day investment horizon Oncology Institute is expected to generate 1.99 times less return on investment than Xencor. In addition to that, Oncology Institute is 2.2 times more volatile than Xencor Inc. It trades about 0.0 of its total potential returns per unit of risk. Xencor Inc is currently generating about 0.02 per unit of volatility. If you would invest  2,351  in Xencor Inc on October 4, 2024 and sell it today you would earn a total of  31.00  from holding Xencor Inc or generate 1.32% return on investment over 90 days.

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

Oncology Institute  vs.  Xencor Inc

Oncology Institute

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Oncology Institute are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Oncology Institute demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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 Oncology Institute and Xencor

The main advantage of trading using opposite Oncology Institute and Xencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oncology Institute 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 Oncology Institute 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.

Check out your portfolio center.

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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.