Correlation Between GM and XFit Brands
Can any of the company-specific risk be diversified away by investing in both GM and XFit Brands 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 GM and XFit Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and XFit Brands, you can compare the effects of market volatilities on GM and XFit Brands 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 GM with a short position of XFit Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and XFit Brands.
Diversification Opportunities for GM and XFit Brands
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and XFit is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and XFit Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XFit Brands and GM 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 General Motors are associated (or correlated) with XFit Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XFit Brands has no effect on the direction of GM i.e., GM and XFit Brands go up and down completely randomly.
Pair Corralation between GM and XFit Brands
If you would invest 0.10 in XFit Brands on November 29, 2024 and sell it today you would earn a total of 0.00 from holding XFit Brands or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. XFit Brands
Performance |
| Timeline |
| General Motors |
| XFit Brands |
GM and XFit Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and XFit Brands
The main advantage of trading using opposite GM and XFit Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM position performs unexpectedly, XFit Brands 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 XFit Brands will offset losses from the drop in XFit Brands' long position.The idea behind General Motors and XFit Brands 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.| XFit Brands vs. Sligro Food Group | XFit Brands vs. Tradeshow Marketing | XFit Brands vs. Academy Sports Outdoors | XFit Brands vs. BBB Foods |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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