Correlation Between Viridian Therapeutics and Xencor

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

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

Diversification Opportunities for Viridian Therapeutics and Xencor

-0.67

Correlation Coefficient

Viridian Therapeutics  Xencor

Excellent diversification

The 3 months correlation between Viridian and Xencor is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Viridian Therapeutics and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Viridian Therapeutics 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 Viridian Therapeutics 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 Viridian Therapeutics i.e., Viridian Therapeutics and Xencor go up and down completely randomly.

Pair Corralation between Viridian Therapeutics and Xencor

Given the investment horizon of 90 days Viridian Therapeutics is expected to generate 1.43 times more return on investment than Xencor. However, Viridian Therapeutics is 1.43 times more volatile than Xencor Inc. It trades about 0.1 of its potential returns per unit of risk. Xencor Inc is currently generating about 0.08 per unit of risk. If you would invest  1,231  in Viridian Therapeutics on October 4, 2024 and sell it today you would earn a total of  744.00  from holding Viridian Therapeutics or generate 60.44% return on investment over 90 days.

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

Viridian Therapeutics  vs.  Xencor Inc

Viridian Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viridian Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm 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 Viridian Therapeutics and Xencor

The main advantage of trading using opposite Viridian Therapeutics and Xencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viridian Therapeutics 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 Viridian Therapeutics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.