Correlation Between Waters and Xponential Fitness
Can any of the company-specific risk be diversified away by investing in both Waters and Xponential Fitness 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 Waters and Xponential Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Waters and Xponential Fitness, you can compare the effects of market volatilities on Waters and Xponential Fitness 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 Waters with a short position of Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Waters and Xponential Fitness.
Diversification Opportunities for Waters and Xponential Fitness
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Waters and Xponential is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Waters and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Waters 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 Waters are associated (or correlated) with Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Waters i.e., Waters and Xponential Fitness go up and down completely randomly.
Pair Corralation between Waters and Xponential Fitness
Considering the 90-day investment horizon Waters is expected to generate 1.57 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, Waters is 1.49 times less risky than Xponential Fitness. It trades about 0.15 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,230 in Xponential Fitness on August 25, 2024 and sell it today you would earn a total of 264.00 from holding Xponential Fitness or generate 21.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Waters vs. Xponential Fitness
Performance |
| Timeline |
| Waters |
| Xponential Fitness |
Waters and Xponential Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Waters and Xponential Fitness
The main advantage of trading using opposite Waters and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Waters position performs unexpectedly, Xponential Fitness 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 Xponential Fitness will offset losses from the drop in Xponential Fitness' long position.| Waters vs. IDEXX Laboratories | Waters vs. IQVIA Holdings | Waters vs. Charles River Laboratories | Waters vs. Revvity |
| Xponential Fitness vs. Planet Fitness | Xponential Fitness vs. Bowlero Corp | Xponential Fitness vs. JAKKS Pacific | Xponential Fitness vs. Acushnet Holdings Corp |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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