Correlation Between Bright Horizons and XWELL
Can any of the company-specific risk be diversified away by investing in both Bright Horizons and XWELL 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 Bright Horizons and XWELL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bright Horizons Family and XWELL Inc, you can compare the effects of market volatilities on Bright Horizons and XWELL 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 Bright Horizons with a short position of XWELL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bright Horizons and XWELL.
Diversification Opportunities for Bright Horizons and XWELL
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bright and XWELL is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Bright Horizons Family and XWELL Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XWELL Inc and Bright Horizons 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 Bright Horizons Family are associated (or correlated) with XWELL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XWELL Inc has no effect on the direction of Bright Horizons i.e., Bright Horizons and XWELL go up and down completely randomly.
Pair Corralation between Bright Horizons and XWELL
Given the investment horizon of 90 days Bright Horizons Family is expected to generate 1.22 times more return on investment than XWELL. However, Bright Horizons is 1.22 times more volatile than XWELL Inc. It trades about -0.16 of its potential returns per unit of risk. XWELL Inc is currently generating about -0.37 per unit of risk. If you would invest 13,079 in Bright Horizons Family on August 28, 2024 and sell it today you would lose (1,569) from holding Bright Horizons Family or give up 12.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bright Horizons Family vs. XWELL Inc
Performance |
| Timeline |
| Bright Horizons Family |
| XWELL Inc |
Bright Horizons and XWELL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bright Horizons and XWELL
The main advantage of trading using opposite Bright Horizons and XWELL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bright Horizons position performs unexpectedly, XWELL 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 XWELL will offset losses from the drop in XWELL's long position.| Bright Horizons vs. Frontdoor | Bright Horizons vs. Smart Share Global | Bright Horizons vs. Mister Car Wash | Bright Horizons vs. Carriage Services |
| XWELL vs. Mister Car Wash | XWELL vs. Interactive Strength Common | XWELL vs. Goodfood Market Corp | XWELL vs. Frontdoor |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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