Correlation Between XOMA Corp and Rezolute

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

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

Diversification Opportunities for XOMA Corp and Rezolute

0.49

Correlation Coefficient

XOMA Corp  Rezolute

Very weak diversification

The 3 months correlation between XOMA and Rezolute is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding XOMA Corp and Rezolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rezolute and XOMA Corp 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 XOMA Corp are associated (or correlated) with Rezolute. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rezolute has no effect on the direction of XOMA Corp i.e., XOMA Corp and Rezolute go up and down completely randomly.

Pair Corralation between XOMA Corp and Rezolute

Given the investment horizon of 90 days XOMA Corp is expected to generate 0.69 times more return on investment than Rezolute. However, XOMA Corp is 1.44 times less risky than Rezolute. It trades about 0.09 of its potential returns per unit of risk. Rezolute is currently generating about 0.05 per unit of risk. If you would invest  2,904  in XOMA Corp on September 2, 2024 and sell it today you would earn a total of  441.00  from holding XOMA Corp or generate 15.19% return on investment over 90 days.

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

XOMA Corp  vs.  Rezolute

XOMA Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XOMA Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, XOMA Corp sustained solid returns over the last few months and may actually be approaching a breakup point.

Rezolute

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rezolute are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Rezolute may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with XOMA Corp and Rezolute

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

The idea behind XOMA Corp and Rezolute 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.