Correlation Between Iridium Communications and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both Iridium Communications and Xponential Fitness 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 Iridium Communications and Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iridium Communications and Xponential Fitness, you can compare the effects of market volatilities on Iridium Communications and Xponential Fitness 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 Iridium Communications with a short position of Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iridium Communications and Xponential Fitness.
Diversification Opportunities for Iridium Communications and Xponential Fitness
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Iridium and Xponential is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Iridium Communications and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Iridium Communications 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 Iridium Communications are associated (or correlated) with Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Iridium Communications i.e., Iridium Communications and Xponential Fitness go up and down completely randomly.
Pair Corralation between Iridium Communications and Xponential Fitness
Given the investment horizon of 90 days Iridium Communications is expected to generate 12.41 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, Iridium Communications is 2.84 times less risky than Xponential Fitness. It trades about 0.04 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1,241 in Xponential Fitness on September 2, 2024 and sell it today you would earn a total of 283.00 from holding Xponential Fitness or generate 22.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iridium Communications vs. Xponential Fitness
Performance |
| Timeline |
| Iridium Communications |
| Xponential Fitness |
Iridium Communications and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iridium Communications and Xponential Fitness
The main advantage of trading using opposite Iridium Communications and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iridium Communications position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.| Iridium Communications vs. IHS Holding | Iridium Communications vs. Cogent Communications Group | Iridium Communications vs. IDT Corporation | Iridium Communications vs. Cable One |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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