Correlation Between XMX and Kava
Can any of the company-specific risk be diversified away by investing in both XMX and Kava 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 Kava into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XMX and Kava, you can compare the effects of market volatilities on XMX and Kava 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 Kava. Check out your portfolio center. Please also check ongoing floating volatility patterns of XMX and Kava.
Diversification Opportunities for XMX and Kava
Very weak diversification
The 3 months correlation between XMX and Kava is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding XMX and Kava in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kava 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 Kava. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kava has no effect on the direction of XMX i.e., XMX and Kava go up and down completely randomly.
Pair Corralation between XMX and Kava
Assuming the 90 days trading horizon XMX is expected to under-perform the Kava. But the crypto coin apears to be less risky and, when comparing its historical volatility, XMX is 1.34 times less risky than Kava. The crypto coin trades about -0.21 of its potential returns per unit of risk. The Kava is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 54.00 in Kava on November 9, 2024 and sell it today you would lose (5.00) from holding Kava or give up 9.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
XMX vs. Kava
Performance |
| Timeline |
| XMX |
| Kava |
XMX and Kava Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XMX and Kava
The main advantage of trading using opposite XMX and Kava positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XMX position performs unexpectedly, Kava 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 Kava will offset losses from the drop in Kava's long position.The idea behind XMX and Kava 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |