Correlation Between Small Cap and XCHG Limited
Can any of the company-specific risk be diversified away by investing in both Small Cap 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 Small Cap and XCHG Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Premium and XCHG Limited American, you can compare the effects of market volatilities on Small Cap 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 Small Cap with a short position of XCHG Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and XCHG Limited.
Diversification Opportunities for Small Cap and XCHG Limited
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Small and XCHG is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Premium 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 Small Cap 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 Small Cap Premium 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 Small Cap i.e., Small Cap and XCHG Limited go up and down completely randomly.
Pair Corralation between Small Cap and XCHG Limited
Considering the 90-day investment horizon Small Cap is expected to generate 559.5 times less return on investment than XCHG Limited. But when comparing it to its historical volatility, Small Cap Premium is 263.99 times less risky than XCHG Limited. It trades about 0.07 of its potential returns per unit of risk. XCHG Limited American is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 0.00 in XCHG Limited American on September 4, 2024 and sell it today you would earn a total of 1,699 from holding XCHG Limited American or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 24.7% |
| Values | Daily Returns |
Small Cap Premium vs. XCHG Limited American
Performance |
| Timeline |
| Small Cap Premium |
| XCHG Limited American |
Small Cap and XCHG Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and XCHG Limited
The main advantage of trading using opposite Small Cap and XCHG Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap 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.| Small Cap vs. RiverNorth Specialty Finance | Small Cap vs. Royce Micro Cap | Small Cap vs. First Trust Enhanced | Small Cap vs. Voya Global Advantage |
| XCHG Limited vs. Small Cap Premium | XCHG Limited vs. Lincoln Educational Services | XCHG Limited vs. PennantPark Floating Rate | XCHG Limited vs. Kite Realty Group |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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