Correlation Between Xp and Capital Southwest
Can any of the company-specific risk be diversified away by investing in both Xp and Capital Southwest 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 Capital Southwest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Capital Southwest, you can compare the effects of market volatilities on Xp and Capital Southwest 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 Capital Southwest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Capital Southwest.
Diversification Opportunities for Xp and Capital Southwest
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xp and Capital is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Capital Southwest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Southwest 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 Capital Southwest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Southwest has no effect on the direction of Xp i.e., Xp and Capital Southwest go up and down completely randomly.
Pair Corralation between Xp and Capital Southwest
Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the Capital Southwest. In addition to that, Xp is 6.47 times more volatile than Capital Southwest. It trades about -0.21 of its total potential returns per unit of risk. Capital Southwest is currently generating about 0.03 per unit of volatility. If you would invest 2,560 in Capital Southwest on August 24, 2024 and sell it today you would earn a total of 7.00 from holding Capital Southwest or generate 0.27% 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. Capital Southwest
Performance |
| Timeline |
| Xp Inc |
| Capital Southwest |
Xp and Capital Southwest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Capital Southwest
The main advantage of trading using opposite Xp and Capital Southwest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, Capital Southwest 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 Capital Southwest will offset losses from the drop in Capital Southwest's long position.| Xp vs. SCOR PK | Xp vs. Aquagold International | Xp vs. Small Cap Core | Xp vs. Morningstar Unconstrained Allocation |
| Capital Southwest vs. GE Vernova LLC | Capital Southwest vs. Cheniere Energy Partners | Capital Southwest vs. NRG Energy | Capital Southwest vs. Allient |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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