Correlation Between XLMedia PLC and Spirent Communications
Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and Spirent Communications 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 XLMedia PLC and Spirent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XLMedia PLC and Spirent Communications plc, you can compare the effects of market volatilities on XLMedia PLC and Spirent Communications 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 XLMedia PLC with a short position of Spirent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Spirent Communications.
Diversification Opportunities for XLMedia PLC and Spirent Communications
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XLMedia and Spirent is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Spirent Communications plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spirent Communications and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with Spirent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spirent Communications has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Spirent Communications go up and down completely randomly.
Pair Corralation between XLMedia PLC and Spirent Communications
Assuming the 90 days trading horizon XLMedia PLC is expected to generate 1.97 times more return on investment than Spirent Communications. However, XLMedia PLC is 1.97 times more volatile than Spirent Communications plc. It trades about 0.35 of its potential returns per unit of risk. Spirent Communications plc is currently generating about 0.3 per unit of risk. If you would invest 930.00 in XLMedia PLC on November 7, 2024 and sell it today you would earn a total of 135.00 from holding XLMedia PLC or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XLMedia PLC vs. Spirent Communications plc
Performance |
| Timeline |
| XLMedia PLC |
| Spirent Communications |
XLMedia PLC and Spirent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XLMedia PLC and Spirent Communications
The main advantage of trading using opposite XLMedia PLC and Spirent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC position performs unexpectedly, Spirent Communications 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 Spirent Communications will offset losses from the drop in Spirent Communications' long position.| XLMedia PLC vs. SBM Offshore NV | XLMedia PLC vs. Lindsell Train Investment | XLMedia PLC vs. Home Depot | XLMedia PLC vs. DFS Furniture PLC |
| Spirent Communications vs. Seraphim Space Investment | Spirent Communications vs. Canadian General Investments | Spirent Communications vs. EJF Investments | Spirent Communications vs. Cellnex Telecom SA |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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