Correlation Between Fox Factory and Xos Equity
Can any of the company-specific risk be diversified away by investing in both Fox Factory and Xos Equity 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 Fox Factory and Xos Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fox Factory Holding and Xos Equity Warrants, you can compare the effects of market volatilities on Fox Factory and Xos Equity 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 Fox Factory with a short position of Xos Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fox Factory and Xos Equity.
Diversification Opportunities for Fox Factory and Xos Equity
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fox and Xos is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Fox Factory Holding and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants and Fox Factory 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 Fox Factory Holding are associated (or correlated) with Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of Fox Factory i.e., Fox Factory and Xos Equity go up and down completely randomly.
Pair Corralation between Fox Factory and Xos Equity
Given the investment horizon of 90 days Fox Factory Holding is expected to generate 0.15 times more return on investment than Xos Equity. However, Fox Factory Holding is 6.62 times less risky than Xos Equity. It trades about -0.27 of its potential returns per unit of risk. Xos Equity Warrants is currently generating about -0.23 per unit of risk. If you would invest 3,750 in Fox Factory Holding on August 29, 2024 and sell it today you would lose (577.00) from holding Fox Factory Holding or give up 15.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fox Factory Holding vs. Xos Equity Warrants
Performance |
| Timeline |
| Fox Factory Holding |
| Xos Equity Warrants |
Fox Factory and Xos Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fox Factory and Xos Equity
The main advantage of trading using opposite Fox Factory and Xos Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fox Factory position performs unexpectedly, Xos Equity 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 Equity will offset losses from the drop in Xos Equity's long position.The idea behind Fox Factory Holding and Xos Equity Warrants 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.| Xos Equity vs. Microvast Holdings | Xos Equity vs. EVgo Equity Warrants | Xos Equity vs. Faraday Future Intelligent | Xos Equity vs. Xos Inc |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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