Correlation Between XLMedia PLC and RELX PLC

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Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and RELX 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 XLMedia PLC and RELX PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and RELX PLC, you can compare the effects of market volatilities on XLMedia PLC and RELX 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 XLMedia PLC with a short position of RELX PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and RELX PLC.

Diversification Opportunities for XLMedia PLC and RELX PLC

-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between XLMedia and RELX is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and RELX PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RELX PLC and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with RELX PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RELX PLC has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and RELX PLC go up and down completely randomly.

Pair Corralation between XLMedia PLC and RELX PLC

Assuming the 90 days horizon XLMedia PLC is expected to under-perform the RELX PLC. In addition to that, XLMedia PLC is 6.87 times more volatile than RELX PLC. It trades about -0.05 of its total potential returns per unit of risk. RELX PLC is currently generating about 0.18 per unit of volatility. If you would invest  4,348  in RELX PLC on October 22, 2024 and sell it today you would earn a total of  338.00  from holding RELX PLC or generate 7.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

XLMedia PLC  vs.  RELX PLC

 Performance 
       Timeline  
XLMedia PLC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days XLMedia PLC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
RELX PLC 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in RELX PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, RELX PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

XLMedia PLC and RELX PLC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with XLMedia PLC and RELX PLC

The main advantage of trading using opposite XLMedia PLC and RELX PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC position performs unexpectedly, RELX 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 RELX PLC will offset losses from the drop in RELX PLC's long position.
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The idea behind XLMedia PLC and RELX PLC 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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