Correlation Between UMF and Xtra Energy
Can any of the company-specific risk be diversified away by investing in both UMF and Xtra Energy 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 UMF and Xtra Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UMF Group and Xtra Energy Corp, you can compare the effects of market volatilities on UMF and Xtra Energy 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 UMF with a short position of Xtra Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of UMF and Xtra Energy.
Diversification Opportunities for UMF and Xtra Energy
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between UMF and Xtra is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding UMF Group and Xtra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Energy Corp and UMF 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 UMF Group are associated (or correlated) with Xtra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Energy Corp has no effect on the direction of UMF i.e., UMF and Xtra Energy go up and down completely randomly.
Pair Corralation between UMF and Xtra Energy
If you would invest 11.00 in Xtra Energy Corp on August 27, 2024 and sell it today you would earn a total of 5.00 from holding Xtra Energy Corp or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 4.76% |
| Values | Daily Returns |
UMF Group vs. Xtra Energy Corp
Performance |
| Timeline |
| UMF Group |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xtra Energy Corp |
UMF and Xtra Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UMF and Xtra Energy
The main advantage of trading using opposite UMF and Xtra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UMF position performs unexpectedly, Xtra Energy 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 Xtra Energy will offset losses from the drop in Xtra Energy's long position.The idea behind UMF Group and Xtra Energy Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Xtra Energy vs. XCana Petroleum | Xtra Energy vs. New Generation Consumer | Xtra Energy vs. Arsenal Digital Holdings | Xtra Energy vs. UHF Logistics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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