Correlation Between Xos and American Premium
Can any of the company-specific risk be diversified away by investing in both Xos and American Premium 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 Xos and American Premium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xos Inc and American Premium Water, you can compare the effects of market volatilities on Xos and American Premium 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 Xos with a short position of American Premium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xos and American Premium.
Diversification Opportunities for Xos and American Premium
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xos and American is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Xos Inc and American Premium Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Premium Water and Xos 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 Xos Inc are associated (or correlated) with American Premium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Premium Water has no effect on the direction of Xos i.e., Xos and American Premium go up and down completely randomly.
Pair Corralation between Xos and American Premium
Considering the 90-day investment horizon Xos is expected to generate 257.14 times less return on investment than American Premium. But when comparing it to its historical volatility, Xos Inc is 77.47 times less risky than American Premium. It trades about 0.1 of its potential returns per unit of risk. American Premium Water is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 0.00 in American Premium Water on October 23, 2024 and sell it today you would earn a total of 0.01 from holding American Premium Water or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xos Inc vs. American Premium Water
Performance |
| Timeline |
| Xos Inc |
| American Premium Water |
Xos and American Premium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xos and American Premium
The main advantage of trading using opposite Xos and American Premium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos position performs unexpectedly, American Premium 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 American Premium will offset losses from the drop in American Premium's long position.The idea behind Xos Inc and American Premium Water 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.| American Premium vs. First Tractor | American Premium vs. Ag Growth International | American Premium vs. AmeraMex International | American Premium vs. Arts Way Manufacturing Co |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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