Correlation Between Xp and Mars Acquisition
Can any of the company-specific risk be diversified away by investing in both Xp and Mars Acquisition 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 Mars Acquisition into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Mars Acquisition Corp, you can compare the effects of market volatilities on Xp and Mars Acquisition 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 Mars Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Mars Acquisition.
Diversification Opportunities for Xp and Mars Acquisition
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xp and Mars is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Mars Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mars Acquisition Corp 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 Mars Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mars Acquisition Corp has no effect on the direction of Xp i.e., Xp and Mars Acquisition go up and down completely randomly.
Pair Corralation between Xp and Mars Acquisition
Allowing for the 90-day total investment horizon Xp is expected to generate 23.09 times less return on investment than Mars Acquisition. But when comparing it to its historical volatility, Xp Inc is 3.7 times less risky than Mars Acquisition. It trades about 0.01 of its potential returns per unit of risk. Mars Acquisition Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 22.00 in Mars Acquisition Corp on September 3, 2024 and sell it today you would earn a total of 10.00 from holding Mars Acquisition Corp or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 38.59% |
| Values | Daily Returns |
Xp Inc vs. Mars Acquisition Corp
Performance |
| Timeline |
| Xp Inc |
| Mars Acquisition Corp |
Xp and Mars Acquisition Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Mars Acquisition
The main advantage of trading using opposite Xp and Mars Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, Mars Acquisition 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 Mars Acquisition will offset losses from the drop in Mars Acquisition's long position.The idea behind Xp Inc and Mars Acquisition Corp 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.| Mars Acquisition vs. Alpha One | Mars Acquisition vs. Manaris Corp | Mars Acquisition vs. SCOR PK | Mars Acquisition vs. Aquagold International |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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