Correlation Between Xp and Agriculture Natural
Can any of the company-specific risk be diversified away by investing in both Xp and Agriculture Natural 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 Xp and Agriculture Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Agriculture Natural Solutions, you can compare the effects of market volatilities on Xp and Agriculture Natural 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 Xp with a short position of Agriculture Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Agriculture Natural.
Diversification Opportunities for Xp and Agriculture Natural
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Xp and Agriculture is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Agriculture Natural Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agriculture Natural and Xp 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 Xp Inc are associated (or correlated) with Agriculture Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agriculture Natural has no effect on the direction of Xp i.e., Xp and Agriculture Natural go up and down completely randomly.
Pair Corralation between Xp and Agriculture Natural
Allowing for the 90-day total investment horizon Xp is expected to generate 1.85 times less return on investment than Agriculture Natural. But when comparing it to its historical volatility, Xp Inc is 3.12 times less risky than Agriculture Natural. It trades about 0.41 of its potential returns per unit of risk. Agriculture Natural Solutions is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 28.00 in Agriculture Natural Solutions on November 18, 2024 and sell it today you would earn a total of 10.00 from holding Agriculture Natural Solutions or generate 35.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Xp Inc vs. Agriculture Natural Solutions
Performance |
| Timeline |
| Xp Inc |
| Agriculture Natural |
Xp and Agriculture Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Agriculture Natural
The main advantage of trading using opposite Xp and Agriculture Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, Agriculture Natural 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 Agriculture Natural will offset losses from the drop in Agriculture Natural's long position.The idea behind Xp Inc and Agriculture Natural Solutions 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.| Agriculture Natural vs. Daily Journal Corp | Agriculture Natural vs. Essent Group | Agriculture Natural vs. Donegal Group B | Agriculture Natural vs. MediaAlpha |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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