Correlation Between Xp and P10
Can any of the company-specific risk be diversified away by investing in both Xp and P10 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 P10 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and P10 Inc, you can compare the effects of market volatilities on Xp and P10 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 P10. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and P10.
Diversification Opportunities for Xp and P10
Very good diversification
The 3 months correlation between Xp and P10 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and P10 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on P10 Inc 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 P10. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of P10 Inc has no effect on the direction of Xp i.e., Xp and P10 go up and down completely randomly.
Pair Corralation between Xp and P10
Allowing for the 90-day total investment horizon Xp Inc is expected to generate 1.37 times more return on investment than P10. However, Xp is 1.37 times more volatile than P10 Inc. It trades about 0.41 of its potential returns per unit of risk. P10 Inc is currently generating about -0.15 per unit of risk. If you would invest 1,199 in Xp Inc on November 18, 2024 and sell it today you would earn a total of 275.00 from holding Xp Inc or generate 22.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xp Inc vs. P10 Inc
Performance |
| Timeline |
| Xp Inc |
| P10 Inc |
Xp and P10 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xp and P10
The main advantage of trading using opposite Xp and P10 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, P10 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 P10 will offset losses from the drop in P10's long position.The idea behind Xp Inc and P10 Inc 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.| P10 vs. Horizon Space Acquisition | P10 vs. Erayak Power Solution | P10 vs. AlphaTime Acquisition Corp | P10 vs. Israel Acquisitions Corp |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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