Correlation Between Adient PLC and Xos Equity
Can any of the company-specific risk be diversified away by investing in both Adient PLC and Xos Equity 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 Adient PLC and Xos Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Adient PLC and Xos Equity Warrants, you can compare the effects of market volatilities on Adient PLC and Xos Equity 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 Adient PLC with a short position of Xos Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Adient PLC and Xos Equity.
Diversification Opportunities for Adient PLC and Xos Equity
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Adient and Xos is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Adient PLC and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants and Adient 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 Adient PLC are associated (or correlated) with Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of Adient PLC i.e., Adient PLC and Xos Equity go up and down completely randomly.
Pair Corralation between Adient PLC and Xos Equity
Given the investment horizon of 90 days Adient PLC is expected to generate 0.11 times more return on investment than Xos Equity. However, Adient PLC is 8.91 times less risky than Xos Equity. It trades about -0.02 of its potential returns per unit of risk. Xos Equity Warrants is currently generating about -0.29 per unit of risk. If you would invest 1,953 in Adient PLC on September 1, 2024 and sell it today you would lose (30.00) from holding Adient PLC or give up 1.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Adient PLC vs. Xos Equity Warrants
Performance |
| Timeline |
| Adient PLC |
| Xos Equity Warrants |
Adient PLC and Xos Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Adient PLC and Xos Equity
The main advantage of trading using opposite Adient PLC and Xos Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adient PLC position performs unexpectedly, Xos Equity 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 Xos Equity will offset losses from the drop in Xos Equity's long position.| Adient PLC vs. Gentex | Adient PLC vs. Autoliv | Adient PLC vs. Fox Factory Holding | Adient PLC vs. Dana Inc |
| Xos Equity vs. Ford Motor | Xos Equity vs. General Motors | Xos Equity vs. Goodyear Tire Rubber | Xos Equity vs. Li Auto |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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