Correlation Between Flowserve and XCHG Limited
Can any of the company-specific risk be diversified away by investing in both Flowserve and XCHG Limited 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 Flowserve and XCHG Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flowserve and XCHG Limited American, you can compare the effects of market volatilities on Flowserve and XCHG Limited 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 Flowserve with a short position of XCHG Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flowserve and XCHG Limited.
Diversification Opportunities for Flowserve and XCHG Limited
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Flowserve and XCHG is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Flowserve and XCHG Limited American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCHG Limited American and Flowserve 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 Flowserve are associated (or correlated) with XCHG Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCHG Limited American has no effect on the direction of Flowserve i.e., Flowserve and XCHG Limited go up and down completely randomly.
Pair Corralation between Flowserve and XCHG Limited
Considering the 90-day investment horizon Flowserve is expected to generate 0.25 times more return on investment than XCHG Limited. However, Flowserve is 4.04 times less risky than XCHG Limited. It trades about 0.36 of its potential returns per unit of risk. XCHG Limited American is currently generating about -0.39 per unit of risk. If you would invest 5,294 in Flowserve on August 27, 2024 and sell it today you would earn a total of 891.00 from holding Flowserve or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flowserve vs. XCHG Limited American
Performance |
| Timeline |
| Flowserve |
| XCHG Limited American |
Flowserve and XCHG Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flowserve and XCHG Limited
The main advantage of trading using opposite Flowserve and XCHG Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flowserve position performs unexpectedly, XCHG Limited 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 XCHG Limited will offset losses from the drop in XCHG Limited's long position.| Flowserve vs. Aquagold International | Flowserve vs. Morningstar Unconstrained Allocation | Flowserve vs. High Yield Municipal Fund | Flowserve vs. Thrivent High Yield |
| XCHG Limited vs. Graco Inc | XCHG Limited vs. Franklin Electric Co | XCHG Limited vs. Flowserve | XCHG Limited vs. Donaldson |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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