Correlation Between Xp and ClimateRock
Can any of the company-specific risk be diversified away by investing in both Xp and ClimateRock 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 ClimateRock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and ClimateRock Class A, you can compare the effects of market volatilities on Xp and ClimateRock 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 ClimateRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and ClimateRock.
Diversification Opportunities for Xp and ClimateRock
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Xp and ClimateRock is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and ClimateRock Class A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ClimateRock Class 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 ClimateRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ClimateRock Class has no effect on the direction of Xp i.e., Xp and ClimateRock go up and down completely randomly.
Pair Corralation between Xp and ClimateRock
Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the ClimateRock. In addition to that, Xp is 1.21 times more volatile than ClimateRock Class A. It trades about -0.18 of its total potential returns per unit of risk. ClimateRock Class A is currently generating about 0.03 per unit of volatility. If you would invest 1,192 in ClimateRock Class A on January 14, 2025 and sell it today you would earn a total of 10.00 from holding ClimateRock Class A or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xp Inc vs. ClimateRock Class A
Performance |
| Timeline |
| Xp Inc |
| ClimateRock Class |
Xp and ClimateRock Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and ClimateRock
The main advantage of trading using opposite Xp and ClimateRock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, ClimateRock 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 ClimateRock will offset losses from the drop in ClimateRock's long position.| Xp vs. Up Fintech Holding | Xp vs. Bit Digital | Xp vs. Marathon Digital Holdings | Xp vs. MarketAxess Holdings |
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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