Correlation Between Bright Minds and Xencor

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

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

Diversification Opportunities for Bright Minds and Xencor

0.65

Correlation Coefficient

Bright Minds  Xencor

Poor diversification

The 3 months correlation between Bright and Xencor is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Bright Minds Biosciences and Xencor Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xencor Inc and Bright Minds 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 Bright Minds Biosciences 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 Bright Minds i.e., Bright Minds and Xencor go up and down completely randomly.

Pair Corralation between Bright Minds and Xencor

Given the investment horizon of 90 days Bright Minds Biosciences is expected to generate 34.42 times more return on investment than Xencor. However, Bright Minds is 34.42 times more volatile than Xencor Inc. It trades about 0.15 of its potential returns per unit of risk. Xencor Inc is currently generating about 0.19 per unit of risk. If you would invest  109.00  in Bright Minds Biosciences on September 3, 2024 and sell it today you would earn a total of  4,291  from holding Bright Minds Biosciences or generate 3936.7% return on investment over 90 days.

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

Bright Minds Biosciences  vs.  Xencor Inc

Bright Minds Biosciences

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bright Minds Biosciences are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Bright Minds reported solid returns over the last few months and may actually be approaching a breakup point.

Xencor Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xencor Inc are ranked lower than 15 (%) 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 Bright Minds and Xencor

The main advantage of trading using opposite Bright Minds and Xencor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Minds 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 Bright Minds Biosciences 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.