Correlation Between Xencor and Ideaya Biosciences

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

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

Diversification Opportunities for Xencor and Ideaya Biosciences

0.92

Correlation Coefficient

Xencor  Ideaya Biosciences

Almost no diversification

The 3 months correlation between Xencor and Ideaya is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Xencor Inc and Ideaya Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ideaya Biosciences and Xencor 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 Xencor Inc are associated (or correlated) with Ideaya Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ideaya Biosciences has no effect on the direction of Xencor i.e., Xencor and Ideaya Biosciences go up and down completely randomly.

Pair Corralation between Xencor and Ideaya Biosciences

Given the investment horizon of 90 days Xencor Inc is expected to under-perform the Ideaya Biosciences. In addition to that, Xencor is 1.11 times more volatile than Ideaya Biosciences. It trades about -0.38 of its total potential returns per unit of risk. Ideaya Biosciences is currently generating about -0.2 per unit of volatility. If you would invest  2,586  in Ideaya Biosciences on December 25, 2024 and sell it today you would lose (783.00) from holding Ideaya Biosciences or give up 30.28% of portfolio value over 90 days.

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

Xencor Inc  vs.  Ideaya Biosciences

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.

Ideaya Biosciences

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Xencor and Ideaya Biosciences

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

The idea behind Xencor Inc and Ideaya Biosciences 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..