Correlation Between X Square and PSMB
Can any of the company-specific risk be diversified away by investing in both X Square and PSMB 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 X Square and PSMB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Square Balanced and PSMB, you can compare the effects of market volatilities on X Square and PSMB 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 X Square with a short position of PSMB. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Square and PSMB.
Diversification Opportunities for X Square and PSMB
Pay attention - limited upside
The 3 months correlation between SQCBX and PSMB is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding X Square Balanced and PSMB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PSMB and X Square 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 X Square Balanced are associated (or correlated) with PSMB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PSMB has no effect on the direction of X Square i.e., X Square and PSMB go up and down completely randomly.
Pair Corralation between X Square and PSMB
Assuming the 90 days horizon X Square Balanced is expected to generate 1.36 times more return on investment than PSMB. However, X Square is 1.36 times more volatile than PSMB. It trades about 0.08 of its potential returns per unit of risk. PSMB is currently generating about -0.03 per unit of risk. If you would invest 1,082 in X Square Balanced on November 2, 2024 and sell it today you would earn a total of 266.00 from holding X Square Balanced or generate 24.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 19.84% |
| Values | Daily Returns |
X Square Balanced vs. PSMB
Performance |
| Timeline |
| X Square Balanced |
| PSMB |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
X Square and PSMB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Square and PSMB
The main advantage of trading using opposite X Square and PSMB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Square position performs unexpectedly, PSMB 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 PSMB will offset losses from the drop in PSMB's long position.| X Square vs. FT Vest Equity | X Square vs. Zillow Group Class | X Square vs. Northern Lights | X Square vs. VanEck Vectors Moodys |
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.
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