Correlation Between XMReality and West International
Can any of the company-specific risk be diversified away by investing in both XMReality and West International 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 XMReality and West International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XMReality AB and West International AB, you can compare the effects of market volatilities on XMReality and West International 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 XMReality with a short position of West International. Check out your portfolio center. Please also check ongoing floating volatility patterns of XMReality and West International.
Diversification Opportunities for XMReality and West International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between XMReality and West is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding XMReality AB and West International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on West International and XMReality 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 XMReality AB are associated (or correlated) with West International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of West International has no effect on the direction of XMReality i.e., XMReality and West International go up and down completely randomly.
Pair Corralation between XMReality and West International
Assuming the 90 days trading horizon XMReality AB is expected to generate 1.71 times more return on investment than West International. However, XMReality is 1.71 times more volatile than West International AB. It trades about -0.01 of its potential returns per unit of risk. West International AB is currently generating about -0.14 per unit of risk. If you would invest 2.20 in XMReality AB on August 29, 2024 and sell it today you would lose (0.10) from holding XMReality AB or give up 4.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XMReality AB vs. West International AB
Performance |
| Timeline |
| XMReality AB |
| West International |
XMReality and West International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XMReality and West International
The main advantage of trading using opposite XMReality and West International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XMReality position performs unexpectedly, West International 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 West International will offset losses from the drop in West International's long position.| XMReality vs. Tangiamo Touch Technology | XMReality vs. Zaplox AB | XMReality vs. Alligator Bioscience AB | XMReality vs. Garo AB |
| West International vs. XMReality AB | West International vs. Zaplox AB | West International vs. Urb it AB | West International vs. Sonetel AB |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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