Correlation Between Xp and Consumer Portfolio
Can any of the company-specific risk be diversified away by investing in both Xp and Consumer Portfolio 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 Consumer Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Consumer Portfolio Services, you can compare the effects of market volatilities on Xp and Consumer Portfolio 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 Consumer Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Consumer Portfolio.
Diversification Opportunities for Xp and Consumer Portfolio
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xp and Consumer is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Consumer Portfolio Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consumer Portfolio 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 Consumer Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consumer Portfolio has no effect on the direction of Xp i.e., Xp and Consumer Portfolio go up and down completely randomly.
Pair Corralation between Xp and Consumer Portfolio
Allowing for the 90-day total investment horizon Xp is expected to generate 1.25 times less return on investment than Consumer Portfolio. In addition to that, Xp is 1.59 times more volatile than Consumer Portfolio Services. It trades about 0.25 of its total potential returns per unit of risk. Consumer Portfolio Services is currently generating about 0.49 per unit of volatility. If you would invest 1,065 in Consumer Portfolio Services on November 2, 2024 and sell it today you would earn a total of 179.00 from holding Consumer Portfolio Services or generate 16.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xp Inc vs. Consumer Portfolio Services
Performance |
| Timeline |
| Xp Inc |
| Consumer Portfolio |
Xp and Consumer Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Consumer Portfolio
The main advantage of trading using opposite Xp and Consumer Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, Consumer Portfolio 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 Consumer Portfolio will offset losses from the drop in Consumer Portfolio's long position.| Xp vs. PJT Partners | Xp vs. Houlihan Lokey | Xp vs. Piper Sandler Companies | Xp vs. Perella Weinberg Partners |
| Consumer Portfolio vs. Atlanticus Holdings Corp | Consumer Portfolio vs. Mill City Ventures | Consumer Portfolio vs. Nelnet Inc | Consumer Portfolio vs. Senmiao Technology |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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