Correlation Between Herald Investment and Xeros Technology
Can any of the company-specific risk be diversified away by investing in both Herald Investment and Xeros Technology 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 Herald Investment and Xeros Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Xeros Technology Group, you can compare the effects of market volatilities on Herald Investment and Xeros Technology 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 Herald Investment with a short position of Xeros Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Xeros Technology.
Diversification Opportunities for Herald Investment and Xeros Technology
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Herald and Xeros is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Xeros Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xeros Technology and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Xeros Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xeros Technology has no effect on the direction of Herald Investment i.e., Herald Investment and Xeros Technology go up and down completely randomly.
Pair Corralation between Herald Investment and Xeros Technology
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.24 times more return on investment than Xeros Technology. However, Herald Investment Trust is 4.23 times less risky than Xeros Technology. It trades about 0.04 of its potential returns per unit of risk. Xeros Technology Group is currently generating about -0.08 per unit of risk. If you would invest 193,600 in Herald Investment Trust on November 7, 2024 and sell it today you would earn a total of 37,400 from holding Herald Investment Trust or generate 19.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. Xeros Technology Group
Performance |
| Timeline |
| Herald Investment Trust |
| Xeros Technology |
Herald Investment and Xeros Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Xeros Technology
The main advantage of trading using opposite Herald Investment and Xeros Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Xeros Technology 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 Xeros Technology will offset losses from the drop in Xeros Technology's long position.| Herald Investment vs. Take Two Interactive Software | Herald Investment vs. Cairn Homes PLC | Herald Investment vs. Check Point Software | Herald Investment vs. Air Products Chemicals |
| Xeros Technology vs. Pets at Home | Xeros Technology vs. Lindsell Train Investment | Xeros Technology vs. Beazer Homes USA | Xeros Technology vs. Roadside Real Estate |
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 Stocks Directory module to find actively traded stocks across global markets.
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