Correlation Between SES AI and Xos
Can any of the company-specific risk be diversified away by investing in both SES AI and Xos 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 SES AI and Xos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SES AI Corp and Xos Inc, you can compare the effects of market volatilities on SES AI and Xos 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 SES AI with a short position of Xos. Check out your portfolio center. Please also check ongoing floating volatility patterns of SES AI and Xos.
Diversification Opportunities for SES AI and Xos
Poor diversification
The 3 months correlation between SES and Xos is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding SES AI Corp and Xos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Inc and SES AI 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 SES AI Corp are associated (or correlated) with Xos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Inc has no effect on the direction of SES AI i.e., SES AI and Xos go up and down completely randomly.
Pair Corralation between SES AI and Xos
Considering the 90-day investment horizon SES AI Corp is expected to under-perform the Xos. In addition to that, SES AI is 1.82 times more volatile than Xos Inc. It trades about -0.27 of its total potential returns per unit of risk. Xos Inc is currently generating about -0.11 per unit of volatility. If you would invest 536.00 in Xos Inc on August 23, 2024 and sell it today you would lose (130.00) from holding Xos Inc or give up 24.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SES AI Corp vs. Xos Inc
Performance |
| Timeline |
| SES AI Corp |
| Xos Inc |
SES AI and Xos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SES AI and Xos
The main advantage of trading using opposite SES AI and Xos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SES AI position performs unexpectedly, Xos 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 Xos will offset losses from the drop in Xos' long position.| SES AI vs. Cooper Stnd | SES AI vs. Motorcar Parts of | SES AI vs. American Axle Manufacturing | SES AI vs. Stoneridge |
| Xos vs. Lion Electric Corp | Xos vs. Nikola Corp | Xos vs. Wabash National | Xos vs. Hydrofarm Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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