Correlation Between Basic Materials and Xerox
Can any of the company-specific risk be diversified away by investing in both Basic Materials and Xerox 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 Basic Materials and Xerox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Basic Materials and Xerox, you can compare the effects of market volatilities on Basic Materials and Xerox 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 Basic Materials with a short position of Xerox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Basic Materials and Xerox.
Diversification Opportunities for Basic Materials and Xerox
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Basic and Xerox is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Basic Materials and Xerox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox and Basic Materials 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 Basic Materials are associated (or correlated) with Xerox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox has no effect on the direction of Basic Materials i.e., Basic Materials and Xerox go up and down completely randomly.
Pair Corralation between Basic Materials and Xerox
If you would invest (100.00) in Xerox on November 28, 2024 and sell it today you would earn a total of 100.00 from holding Xerox or generate -100.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.0% |
| Values | Daily Returns |
Basic Materials vs. Xerox
Performance |
| Timeline |
Basic Materials and Xerox Volatility Contrast
Predicted Return Density |
| Returns |
Basic Materials
Pair trading matchups for Basic Materials
Pair Trading with Basic Materials and Xerox
The main advantage of trading using opposite Basic Materials and Xerox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Basic Materials position performs unexpectedly, Xerox 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 Xerox will offset losses from the drop in Xerox's long position.| Basic Materials vs. Vulcan Materials | Basic Materials vs. British American Tobacco | Basic Materials vs. Bread Financial Holdings | Basic Materials vs. Nordon Indstrias Metalrgicas |
| Xerox vs. Taiwan Semiconductor Manufacturing | Xerox vs. Verizon Communications | Xerox vs. British American Tobacco | Xerox vs. Universal Health Services, |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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