Correlation Between Candel Therapeutics and Xencor

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

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

Diversification Opportunities for Candel Therapeutics and Xencor

-0.66

Correlation Coefficient

Candel Therapeutics  Xencor

Excellent diversification

The 3 months correlation between Candel and Xencor is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Candel Therapeutics and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Candel 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 Candel 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 Candel Therapeutics i.e., Candel Therapeutics and Xencor go up and down completely randomly.

Pair Corralation between Candel Therapeutics and Xencor

Given the investment horizon of 90 days Candel Therapeutics is expected to under-perform the Xencor. In addition to that, Candel Therapeutics is 2.98 times more volatile than Xencor Inc. It trades about -0.06 of its total potential returns per unit of risk. Xencor Inc is currently generating about 0.47 per unit of volatility. If you would invest  2,152  in Xencor Inc on September 4, 2024 and sell it today you would earn a total of  508.00  from holding Xencor Inc or generate 23.61% return on investment over 90 days.

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

Candel Therapeutics  vs.  Xencor Inc

Candel Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Candel Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Xencor Inc

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xencor Inc are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental indicators, Xencor reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Candel Therapeutics and Xencor

The main advantage of trading using opposite Candel Therapeutics and Xencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Candel 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 Candel 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.