Correlation Between Global Develpmts and XTM
Can any of the company-specific risk be diversified away by investing in both Global Develpmts and XTM 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 Global Develpmts and XTM into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Develpmts and XTM Inc, you can compare the effects of market volatilities on Global Develpmts and XTM 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 Global Develpmts with a short position of XTM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Develpmts and XTM.
Diversification Opportunities for Global Develpmts and XTM
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and XTM is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Global Develpmts and XTM Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTM Inc and Global Develpmts 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 Global Develpmts are associated (or correlated) with XTM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTM Inc has no effect on the direction of Global Develpmts i.e., Global Develpmts and XTM go up and down completely randomly.
Pair Corralation between Global Develpmts and XTM
Given the investment horizon of 90 days Global Develpmts is expected to generate 1.35 times more return on investment than XTM. However, Global Develpmts is 1.35 times more volatile than XTM Inc. It trades about 0.07 of its potential returns per unit of risk. XTM Inc is currently generating about -0.04 per unit of risk. If you would invest 1.36 in Global Develpmts on September 5, 2024 and sell it today you would earn a total of 0.04 from holding Global Develpmts or generate 2.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Global Develpmts vs. XTM Inc
Performance |
| Timeline |
| Global Develpmts |
| XTM Inc |
Global Develpmts and XTM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Develpmts and XTM
The main advantage of trading using opposite Global Develpmts and XTM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Develpmts position performs unexpectedly, XTM 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 XTM will offset losses from the drop in XTM's long position.| Global Develpmts vs. Xalles Holdings | Global Develpmts vs. High Wire Networks | Global Develpmts vs. Alternet Systems | Global Develpmts vs. Widepoint C |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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