Correlation Between Axfood AB and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Axfood AB and XLMedia PLC 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 Axfood AB and XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axfood AB and XLMedia PLC, you can compare the effects of market volatilities on Axfood AB and XLMedia PLC 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 Axfood AB with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axfood AB and XLMedia PLC.
Diversification Opportunities for Axfood AB and XLMedia PLC
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Axfood and XLMedia is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Axfood AB and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Axfood AB 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 Axfood AB are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Axfood AB i.e., Axfood AB and XLMedia PLC go up and down completely randomly.
Pair Corralation between Axfood AB and XLMedia PLC
Assuming the 90 days trading horizon Axfood AB is expected to generate 0.22 times more return on investment than XLMedia PLC. However, Axfood AB is 4.55 times less risky than XLMedia PLC. It trades about 0.03 of its potential returns per unit of risk. XLMedia PLC is currently generating about -0.05 per unit of risk. If you would invest 23,600 in Axfood AB on October 30, 2024 and sell it today you would earn a total of 225.00 from holding Axfood AB or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Axfood AB vs. XLMedia PLC
Performance |
| Timeline |
| Axfood AB |
| XLMedia PLC |
Axfood AB and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axfood AB and XLMedia PLC
The main advantage of trading using opposite Axfood AB and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axfood AB position performs unexpectedly, XLMedia PLC 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 XLMedia PLC will offset losses from the drop in XLMedia PLC's long position.| Axfood AB vs. Associated British Foods | Axfood AB vs. Melia Hotels | Axfood AB vs. Fevertree Drinks Plc | Axfood AB vs. Wyndham Hotels Resorts |
| XLMedia PLC vs. Livermore Investments Group | XLMedia PLC vs. Mobius Investment Trust | XLMedia PLC vs. Lindsell Train Investment | XLMedia PLC vs. FC Investment Trust |
Check out your portfolio center.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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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