Correlation Between AGCO and Xos
Can any of the company-specific risk be diversified away by investing in both AGCO and Xos 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 AGCO and Xos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AGCO Corporation and Xos Inc, you can compare the effects of market volatilities on AGCO and Xos 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 AGCO with a short position of Xos. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGCO and Xos.
Diversification Opportunities for AGCO and Xos
Very good diversification
The 3 months correlation between AGCO and Xos is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding AGCO Corp. and Xos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Inc and AGCO 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 AGCO Corporation are associated (or correlated) with Xos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Inc has no effect on the direction of AGCO i.e., AGCO and Xos go up and down completely randomly.
Pair Corralation between AGCO and Xos
Given the investment horizon of 90 days AGCO Corporation is expected to generate 0.28 times more return on investment than Xos. However, AGCO Corporation is 3.53 times less risky than Xos. It trades about -0.02 of its potential returns per unit of risk. Xos Inc is currently generating about -0.01 per unit of risk. If you would invest 12,412 in AGCO Corporation on August 29, 2024 and sell it today you would lose (2,473) from holding AGCO Corporation or give up 19.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AGCO Corp. vs. Xos Inc
Performance |
| Timeline |
| AGCO |
| Xos Inc |
AGCO and Xos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AGCO and Xos
The main advantage of trading using opposite AGCO and Xos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGCO position performs unexpectedly, Xos 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 will offset losses from the drop in Xos' long position.| AGCO vs. MYR Group | AGCO vs. Granite Construction Incorporated | AGCO vs. Construction Partners | AGCO vs. Great Lakes Dredge |
| Xos vs. Lion Electric Corp | Xos vs. Nikola Corp | Xos vs. Wabash National | Xos vs. Hydrofarm Holdings Group |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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