Correlation Between Xp and Enova International
Can any of the company-specific risk be diversified away by investing in both Xp and Enova International 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 Enova International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Enova International, you can compare the effects of market volatilities on Xp and Enova International 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 Enova International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Enova International.
Diversification Opportunities for Xp and Enova International
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xp and Enova is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Enova International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enova International 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 Enova International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enova International has no effect on the direction of Xp i.e., Xp and Enova International go up and down completely randomly.
Pair Corralation between Xp and Enova International
Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the Enova International. But the stock apears to be less risky and, when comparing its historical volatility, Xp Inc is 1.09 times less risky than Enova International. The stock trades about -0.02 of its potential returns per unit of risk. The Enova International is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 9,499 in Enova International on October 20, 2024 and sell it today you would earn a total of 1,263 from holding Enova International or generate 13.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Xp Inc vs. Enova International
Performance |
| Timeline |
| Xp Inc |
| Enova International |
Xp and Enova International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Enova International
The main advantage of trading using opposite Xp and Enova International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, Enova International 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 Enova International will offset losses from the drop in Enova International's long position.The idea behind Xp Inc and Enova International 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.| Enova International vs. Regional Management Corp | Enova International vs. Encore Capital Group | Enova International vs. Customers Bancorp | Enova International vs. Employers 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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