Correlation Between Xp and LPL Financial
Can any of the company-specific risk be diversified away by investing in both Xp and LPL Financial 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 LPL Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and LPL Financial Holdings, you can compare the effects of market volatilities on Xp and LPL Financial 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 LPL Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and LPL Financial.
Diversification Opportunities for Xp and LPL Financial
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xp and LPL is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and LPL Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPL Financial Holdings 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 LPL Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPL Financial Holdings has no effect on the direction of Xp i.e., Xp and LPL Financial go up and down completely randomly.
Pair Corralation between Xp and LPL Financial
Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the LPL Financial. But the stock apears to be less risky and, when comparing its historical volatility, Xp Inc is 1.24 times less risky than LPL Financial. The stock trades about -0.22 of its potential returns per unit of risk. The LPL Financial Holdings is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 26,405 in LPL Financial Holdings on August 28, 2024 and sell it today you would earn a total of 6,107 from holding LPL Financial Holdings or generate 23.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xp Inc vs. LPL Financial Holdings
Performance |
| Timeline |
| Xp Inc |
| LPL Financial Holdings |
Xp and LPL Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and LPL Financial
The main advantage of trading using opposite Xp and LPL Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, LPL Financial 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 LPL Financial will offset losses from the drop in LPL Financial's long position.| Xp vs. Up Fintech Holding | Xp vs. Bit Digital | Xp vs. Marathon Digital Holdings | Xp vs. MarketAxess Holdings |
| LPL Financial vs. Tradeweb Markets | LPL Financial vs. Raymond James Financial | LPL Financial vs. PJT Partners | LPL Financial vs. Moelis Co |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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