Correlation Between Spirent Communications and XLMedia PLC
Can any of the company-specific risk be diversified away by investing in both Spirent Communications 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 Spirent Communications and XLMedia PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spirent Communications plc and XLMedia PLC, you can compare the effects of market volatilities on Spirent Communications 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 Spirent Communications with a short position of XLMedia PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spirent Communications and XLMedia PLC.
Diversification Opportunities for Spirent Communications and XLMedia PLC
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Spirent and XLMedia is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Spirent Communications plc and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Spirent Communications 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 Spirent Communications plc 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 Spirent Communications i.e., Spirent Communications and XLMedia PLC go up and down completely randomly.
Pair Corralation between Spirent Communications and XLMedia PLC
Assuming the 90 days horizon Spirent Communications is expected to generate 1.08 times less return on investment than XLMedia PLC. But when comparing it to its historical volatility, Spirent Communications plc is 1.67 times less risky than XLMedia PLC. It trades about 0.07 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 7.05 in XLMedia PLC on September 22, 2024 and sell it today you would earn a total of 2.95 from holding XLMedia PLC or generate 41.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spirent Communications plc vs. XLMedia PLC
Performance |
| Timeline |
| Spirent Communications |
| XLMedia PLC |
Spirent Communications and XLMedia PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spirent Communications and XLMedia PLC
The main advantage of trading using opposite Spirent Communications and XLMedia PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spirent Communications 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.| Spirent Communications vs. Superior Plus Corp | Spirent Communications vs. SIVERS SEMICONDUCTORS AB | Spirent Communications vs. Norsk Hydro ASA | Spirent Communications vs. Reliance Steel Aluminum |
| XLMedia PLC vs. GRIFFIN MINING LTD | XLMedia PLC vs. MCEWEN MINING INC | XLMedia PLC vs. Jacquet Metal Service | XLMedia PLC vs. Zijin Mining 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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