Correlation Between Xpel and Carbon Revolution
Can any of the company-specific risk be diversified away by investing in both Xpel and Carbon Revolution 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 Xpel and Carbon Revolution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xpel Inc and Carbon Revolution Public, you can compare the effects of market volatilities on Xpel and Carbon Revolution 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 Xpel with a short position of Carbon Revolution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xpel and Carbon Revolution.
Diversification Opportunities for Xpel and Carbon Revolution
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xpel and Carbon is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Xpel Inc and Carbon Revolution Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carbon Revolution Public and Xpel 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 Xpel Inc are associated (or correlated) with Carbon Revolution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carbon Revolution Public has no effect on the direction of Xpel i.e., Xpel and Carbon Revolution go up and down completely randomly.
Pair Corralation between Xpel and Carbon Revolution
Given the investment horizon of 90 days Xpel is expected to generate 13.63 times less return on investment than Carbon Revolution. But when comparing it to its historical volatility, Xpel Inc is 4.94 times less risky than Carbon Revolution. It trades about 0.04 of its potential returns per unit of risk. Carbon Revolution Public is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3.12 in Carbon Revolution Public on October 19, 2024 and sell it today you would earn a total of 2.88 from holding Carbon Revolution Public or generate 92.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 79.31% |
| Values | Daily Returns |
Xpel Inc vs. Carbon Revolution Public
Performance |
| Timeline |
| Xpel Inc |
| Carbon Revolution Public |
Xpel and Carbon Revolution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xpel and Carbon Revolution
The main advantage of trading using opposite Xpel and Carbon Revolution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xpel position performs unexpectedly, Carbon Revolution 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 Carbon Revolution will offset losses from the drop in Carbon Revolution's long position.| Xpel vs. Dorman Products | Xpel vs. Standard Motor Products | Xpel vs. Motorcar Parts of | Xpel vs. Stoneridge |
| Carbon Revolution vs. Asure Software | Carbon Revolution vs. Asbury Automotive Group | Carbon Revolution vs. Titan Machinery | Carbon Revolution vs. Western Digital |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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