Correlation Between Xos Equity and NetEase
Can any of the company-specific risk be diversified away by investing in both Xos Equity and NetEase 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 Equity and NetEase into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xos Equity Warrants and NetEase, you can compare the effects of market volatilities on Xos Equity and NetEase 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 Equity with a short position of NetEase. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xos Equity and NetEase.
Diversification Opportunities for Xos Equity and NetEase
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xos and NetEase is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Xos Equity Warrants and NetEase in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NetEase and Xos Equity 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 Equity Warrants are associated (or correlated) with NetEase. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NetEase has no effect on the direction of Xos Equity i.e., Xos Equity and NetEase go up and down completely randomly.
Pair Corralation between Xos Equity and NetEase
Assuming the 90 days horizon Xos Equity Warrants is expected to under-perform the NetEase. In addition to that, Xos Equity is 5.86 times more volatile than NetEase. It trades about -0.16 of its total potential returns per unit of risk. NetEase is currently generating about 0.3 per unit of volatility. If you would invest 7,808 in NetEase on September 13, 2024 and sell it today you would earn a total of 1,882 from holding NetEase or generate 24.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Xos Equity Warrants vs. NetEase
Performance |
| Timeline |
| Xos Equity Warrants |
| NetEase |
Xos Equity and NetEase Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xos Equity and NetEase
The main advantage of trading using opposite Xos Equity and NetEase positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xos Equity position performs unexpectedly, NetEase 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 NetEase will offset losses from the drop in NetEase's long position.| Xos Equity vs. Ford Motor | Xos Equity vs. General Motors | Xos Equity vs. Goodyear Tire Rubber | Xos Equity vs. Li Auto |
| NetEase vs. Roblox Corp | NetEase vs. Skillz Platform | NetEase vs. Take Two Interactive Software | NetEase vs. Nintendo Co ADR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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