Correlation Between KARRAT and XMX
Can any of the company-specific risk be diversified away by investing in both KARRAT and XMX 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 KARRAT and XMX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KARRAT and XMX, you can compare the effects of market volatilities on KARRAT and XMX 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 KARRAT with a short position of XMX. Check out your portfolio center. Please also check ongoing floating volatility patterns of KARRAT and XMX.
Diversification Opportunities for KARRAT and XMX
Very weak diversification
The 3 months correlation between KARRAT and XMX is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding KARRAT and XMX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMX and KARRAT 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 KARRAT are associated (or correlated) with XMX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMX has no effect on the direction of KARRAT i.e., KARRAT and XMX go up and down completely randomly.
Pair Corralation between KARRAT and XMX
Assuming the 90 days trading horizon KARRAT is expected to under-perform the XMX. But the crypto coin apears to be less risky and, when comparing its historical volatility, KARRAT is 1.36 times less risky than XMX. The crypto coin trades about -0.04 of its potential returns per unit of risk. The XMX is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 0.00 in XMX on August 25, 2024 and sell it today you would earn a total of 0.00 from holding XMX or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KARRAT vs. XMX
Performance |
| Timeline |
| KARRAT |
| XMX |
KARRAT and XMX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KARRAT and XMX
The main advantage of trading using opposite KARRAT and XMX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KARRAT position performs unexpectedly, XMX 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 XMX will offset losses from the drop in XMX's long position.The idea behind KARRAT and XMX 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.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |