Correlation Between Red Cat and Xerox Corp
Can any of the company-specific risk be diversified away by investing in both Red Cat and Xerox Corp 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 Red Cat and Xerox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Red Cat Holdings and Xerox Corp, you can compare the effects of market volatilities on Red Cat and Xerox Corp 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 Red Cat with a short position of Xerox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Red Cat and Xerox Corp.
Diversification Opportunities for Red Cat and Xerox Corp
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Red and Xerox is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Red Cat Holdings and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp and Red Cat 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 Red Cat Holdings are associated (or correlated) with Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of Red Cat i.e., Red Cat and Xerox Corp go up and down completely randomly.
Pair Corralation between Red Cat and Xerox Corp
Given the investment horizon of 90 days Red Cat Holdings is expected to generate 2.59 times more return on investment than Xerox Corp. However, Red Cat is 2.59 times more volatile than Xerox Corp. It trades about 0.25 of its potential returns per unit of risk. Xerox Corp is currently generating about -0.06 per unit of risk. If you would invest 295.00 in Red Cat Holdings on August 31, 2024 and sell it today you would earn a total of 632.00 from holding Red Cat Holdings or generate 214.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Red Cat Holdings vs. Xerox Corp
Performance |
| Timeline |
| Red Cat Holdings |
| Xerox Corp |
Red Cat and Xerox Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Red Cat and Xerox Corp
The main advantage of trading using opposite Red Cat and Xerox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Red Cat position performs unexpectedly, Xerox Corp 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 Corp will offset losses from the drop in Xerox Corp's long position.| Red Cat vs. Quantum Computing | Red Cat vs. Rigetti Computing | Red Cat vs. D Wave Quantum | Red Cat vs. AstroNova |
| Xerox Corp vs. ExlService Holdings | Xerox Corp vs. CSP Inc | Xerox Corp vs. ASGN Inc | Xerox Corp vs. Jack Henry Associates |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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