Correlation Between Standard and Xos
Can any of the company-specific risk be diversified away by investing in both Standard 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 Standard and Xos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Standard Motor Products and Xos Inc, you can compare the effects of market volatilities on Standard 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 Standard with a short position of Xos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Standard and Xos.
Diversification Opportunities for Standard and Xos
Good diversification
The 3 months correlation between Standard and Xos is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Standard Motor Products and Xos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Inc and Standard 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 Standard Motor Products 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 Standard i.e., Standard and Xos go up and down completely randomly.
Pair Corralation between Standard and Xos
Considering the 90-day investment horizon Standard Motor Products is expected to generate 0.44 times more return on investment than Xos. However, Standard Motor Products is 2.28 times less risky than Xos. It trades about 0.0 of its potential returns per unit of risk. Xos Inc is currently generating about -0.02 per unit of risk. If you would invest 3,523 in Standard Motor Products on August 27, 2024 and sell it today you would lose (209.00) from holding Standard Motor Products or give up 5.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Standard Motor Products vs. Xos Inc
Performance |
| Timeline |
| Standard Motor Products |
| Xos Inc |
Standard and Xos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Standard and Xos
The main advantage of trading using opposite Standard and Xos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Standard 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.| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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