Correlation Between Xp and Netcapital
Can any of the company-specific risk be diversified away by investing in both Xp and Netcapital 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 Netcapital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and Netcapital, you can compare the effects of market volatilities on Xp and Netcapital 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 Netcapital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and Netcapital.
Diversification Opportunities for Xp and Netcapital
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Xp and Netcapital is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Netcapital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Netcapital 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 Netcapital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Netcapital has no effect on the direction of Xp i.e., Xp and Netcapital go up and down completely randomly.
Pair Corralation between Xp and Netcapital
Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the Netcapital. But the stock apears to be less risky and, when comparing its historical volatility, Xp Inc is 2.29 times less risky than Netcapital. The stock trades about -0.23 of its potential returns per unit of risk. The Netcapital is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 169.00 in Netcapital on August 28, 2024 and sell it today you would earn a total of 37.00 from holding Netcapital or generate 21.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xp Inc vs. Netcapital
Performance |
| Timeline |
| Xp Inc |
| Netcapital |
Xp and Netcapital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and Netcapital
The main advantage of trading using opposite Xp and Netcapital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, Netcapital 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 Netcapital will offset losses from the drop in Netcapital's long position.| Xp vs. Up Fintech Holding | Xp vs. Bit Digital | Xp vs. Marathon Digital Holdings | Xp vs. MarketAxess Holdings |
| Netcapital vs. PowerUp Acquisition Corp | Netcapital vs. Aurora Innovation | Netcapital vs. HUMANA INC | Netcapital 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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