Correlation Between XMX and DigiByte
Can any of the company-specific risk be diversified away by investing in both XMX and DigiByte 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 XMX and DigiByte into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XMX and DigiByte, you can compare the effects of market volatilities on XMX and DigiByte 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 XMX with a short position of DigiByte. Check out your portfolio center. Please also check ongoing floating volatility patterns of XMX and DigiByte.
Diversification Opportunities for XMX and DigiByte
Weak diversification
The 3 months correlation between XMX and DigiByte is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding XMX and DigiByte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DigiByte and XMX 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 XMX are associated (or correlated) with DigiByte. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DigiByte has no effect on the direction of XMX i.e., XMX and DigiByte go up and down completely randomly.
Pair Corralation between XMX and DigiByte
Assuming the 90 days trading horizon XMX is expected to generate 2.92 times less return on investment than DigiByte. But when comparing it to its historical volatility, XMX is 1.17 times less risky than DigiByte. It trades about 0.15 of its potential returns per unit of risk. DigiByte is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 0.59 in DigiByte on August 25, 2024 and sell it today you would earn a total of 0.51 from holding DigiByte or generate 86.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XMX vs. DigiByte
Performance |
| Timeline |
| XMX |
| DigiByte |
XMX and DigiByte Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XMX and DigiByte
The main advantage of trading using opposite XMX and DigiByte positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XMX position performs unexpectedly, DigiByte 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 DigiByte will offset losses from the drop in DigiByte's long position.The idea behind XMX and DigiByte 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.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |