Correlation Between Graco and Xometry
Can any of the company-specific risk be diversified away by investing in both Graco and Xometry 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 Graco and Xometry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Graco Inc and Xometry, you can compare the effects of market volatilities on Graco and Xometry 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 Graco with a short position of Xometry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Graco and Xometry.
Diversification Opportunities for Graco and Xometry
Poor diversification
The 3 months correlation between Graco and Xometry is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Xometry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xometry and Graco 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 Graco Inc are associated (or correlated) with Xometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xometry has no effect on the direction of Graco i.e., Graco and Xometry go up and down completely randomly.
Pair Corralation between Graco and Xometry
Considering the 90-day investment horizon Graco is expected to generate 1.14 times less return on investment than Xometry. But when comparing it to its historical volatility, Graco Inc is 3.77 times less risky than Xometry. It trades about 0.05 of its potential returns per unit of risk. Xometry is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 4,228 in Xometry on August 27, 2024 and sell it today you would lose (1,088) from holding Xometry or give up 25.73% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Graco Inc vs. Xometry
Performance |
| Timeline |
| Graco Inc |
| Xometry |
Graco and Xometry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Graco and Xometry
The main advantage of trading using opposite Graco and Xometry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Graco position performs unexpectedly, Xometry 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 Xometry will offset losses from the drop in Xometry's long position.| Graco vs. Aquagold International | Graco vs. Morningstar Unconstrained Allocation | Graco vs. High Yield Municipal Fund | Graco vs. Thrivent High Yield |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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