Correlation Between John Bean and XCHG Limited
Can any of the company-specific risk be diversified away by investing in both John Bean and XCHG Limited 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 John Bean and XCHG Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between John Bean Technologies and XCHG Limited American, you can compare the effects of market volatilities on John Bean and XCHG Limited 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 John Bean with a short position of XCHG Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of John Bean and XCHG Limited.
Diversification Opportunities for John Bean and XCHG Limited
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between John and XCHG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding John Bean Technologies and XCHG Limited American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XCHG Limited American and John Bean 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 John Bean Technologies are associated (or correlated) with XCHG Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XCHG Limited American has no effect on the direction of John Bean i.e., John Bean and XCHG Limited go up and down completely randomly.
Pair Corralation between John Bean and XCHG Limited
Considering the 90-day investment horizon John Bean Technologies is expected to generate 0.28 times more return on investment than XCHG Limited. However, John Bean Technologies is 3.57 times less risky than XCHG Limited. It trades about 0.13 of its potential returns per unit of risk. XCHG Limited American is currently generating about -0.39 per unit of risk. If you would invest 11,698 in John Bean Technologies on August 27, 2024 and sell it today you would earn a total of 710.00 from holding John Bean Technologies or generate 6.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
John Bean Technologies vs. XCHG Limited American
Performance |
| Timeline |
| John Bean Technologies |
| XCHG Limited American |
John Bean and XCHG Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with John Bean and XCHG Limited
The main advantage of trading using opposite John Bean and XCHG Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if John Bean position performs unexpectedly, XCHG Limited 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 XCHG Limited will offset losses from the drop in XCHG Limited's long position.| John Bean vs. Flowserve | John Bean vs. Franklin Electric Co | John Bean vs. ITT Inc | John Bean vs. IDEX Corporation |
| XCHG Limited vs. Graco Inc | XCHG Limited vs. Franklin Electric Co | XCHG Limited vs. Flowserve | XCHG Limited vs. Donaldson |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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