Correlation Between DUSK and Xai
Can any of the company-specific risk be diversified away by investing in both DUSK and Xai 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 DUSK and Xai into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DUSK and Xai, you can compare the effects of market volatilities on DUSK and Xai 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 DUSK with a short position of Xai. Check out your portfolio center. Please also check ongoing floating volatility patterns of DUSK and Xai.
Diversification Opportunities for DUSK and Xai
Almost no diversification
The 3 months correlation between DUSK and Xai is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding DUSK and Xai in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xai and DUSK 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 DUSK are associated (or correlated) with Xai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xai has no effect on the direction of DUSK i.e., DUSK and Xai go up and down completely randomly.
Pair Corralation between DUSK and Xai
Assuming the 90 days trading horizon DUSK is expected to generate 0.69 times more return on investment than Xai. However, DUSK is 1.46 times less risky than Xai. It trades about -0.41 of its potential returns per unit of risk. Xai is currently generating about -0.32 per unit of risk. If you would invest 21.00 in DUSK on November 8, 2024 and sell it today you would lose (10.00) from holding DUSK or give up 47.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DUSK vs. Xai
Performance |
| Timeline |
| DUSK |
| Xai |
DUSK and Xai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DUSK and Xai
The main advantage of trading using opposite DUSK and Xai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DUSK position performs unexpectedly, Xai 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 Xai will offset losses from the drop in Xai's long position.The idea behind DUSK and Xai 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.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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities |