Correlation Between Alphabet and XP Infra
Can any of the company-specific risk be diversified away by investing in both Alphabet and XP Infra 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 Alphabet and XP Infra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphabet Inc Class C and XP Infra Fund, you can compare the effects of market volatilities on Alphabet and XP Infra 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 Alphabet with a short position of XP Infra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphabet and XP Infra.
Diversification Opportunities for Alphabet and XP Infra
Pay attention - limited upside
The 3 months correlation between Alphabet and XPIE11 is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Alphabet Inc Class C and XP Infra Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XP Infra Fund and Alphabet 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 Alphabet Inc Class C are associated (or correlated) with XP Infra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XP Infra Fund has no effect on the direction of Alphabet i.e., Alphabet and XP Infra go up and down completely randomly.
Pair Corralation between Alphabet and XP Infra
Given the investment horizon of 90 days Alphabet Inc Class C is expected to generate 2.0 times more return on investment than XP Infra. However, Alphabet is 2.0 times more volatile than XP Infra Fund. It trades about 0.08 of its potential returns per unit of risk. XP Infra Fund is currently generating about -0.01 per unit of risk. If you would invest 10,797 in Alphabet Inc Class C on August 30, 2024 and sell it today you would earn a total of 6,285 from holding Alphabet Inc Class C or generate 58.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.75% |
| Values | Daily Returns |
Alphabet Inc Class C vs. XP Infra Fund
Performance |
| Timeline |
| Alphabet Class C |
| XP Infra Fund |
Alphabet and XP Infra Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphabet and XP Infra
The main advantage of trading using opposite Alphabet and XP Infra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphabet position performs unexpectedly, XP Infra 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 XP Infra will offset losses from the drop in XP Infra's long position.The idea behind Alphabet Inc Class C and XP Infra Fund 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.| XP Infra vs. Energisa SA | XP Infra vs. BTG Pactual Logstica | XP Infra vs. Plano Plano Desenvolvimento | XP Infra vs. Companhia Habitasul de |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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