Correlation Between Xeris Pharmaceuticals and First Foundation

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

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

Diversification Opportunities for Xeris Pharmaceuticals and First Foundation

0.68

Correlation Coefficient

Xeris Pharmaceuticals  First Foundation

Poor diversification

The 3 months correlation between Xeris and First is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xeris Pharmaceuticals and First Foundation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Foundation and Xeris Pharmaceuticals 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 Xeris Pharmaceuticals are associated (or correlated) with First Foundation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Foundation has no effect on the direction of Xeris Pharmaceuticals i.e., Xeris Pharmaceuticals and First Foundation go up and down completely randomly.

Pair Corralation between Xeris Pharmaceuticals and First Foundation

Given the investment horizon of 90 days Xeris Pharmaceuticals is expected to generate 0.77 times more return on investment than First Foundation. However, Xeris Pharmaceuticals is 1.31 times less risky than First Foundation. It trades about -0.1 of its potential returns per unit of risk. First Foundation is currently generating about -0.14 per unit of risk. If you would invest  221.00  in Xeris Pharmaceuticals on February 27, 2024 and sell it today you would lose (28.00) from holding Xeris Pharmaceuticals or give up 12.67% of portfolio value over 90 days.

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

Xeris Pharmaceuticals  vs.  First Foundation

Xeris Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xeris Pharmaceuticals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

First Foundation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days First Foundation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Xeris Pharmaceuticals and First Foundation

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

The idea behind Xeris Pharmaceuticals and First Foundation 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.