Correlation Between Xpel and Standard
Can any of the company-specific risk be diversified away by investing in both Xpel and Standard 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 Standard into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xpel Inc and Standard Motor Products, you can compare the effects of market volatilities on Xpel and Standard 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 Standard. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xpel and Standard.
Diversification Opportunities for Xpel and Standard
Very weak diversification
The 3 months correlation between Xpel and Standard is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Xpel Inc and Standard Motor Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Standard Motor Products 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 Standard. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Standard Motor Products has no effect on the direction of Xpel i.e., Xpel and Standard go up and down completely randomly.
Pair Corralation between Xpel and Standard
Given the investment horizon of 90 days Xpel Inc is expected to generate 1.98 times more return on investment than Standard. However, Xpel is 1.98 times more volatile than Standard Motor Products. It trades about 0.02 of its potential returns per unit of risk. Standard Motor Products is currently generating about 0.0 per unit of risk. If you would invest 4,691 in Xpel Inc on August 27, 2024 and sell it today you would lose (118.00) from holding Xpel Inc or give up 2.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xpel Inc vs. Standard Motor Products
Performance |
| Timeline |
| Xpel Inc |
| Standard Motor Products |
Xpel and Standard Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xpel and Standard
The main advantage of trading using opposite Xpel and Standard positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xpel position performs unexpectedly, Standard 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 Standard will offset losses from the drop in Standard's long position.| Xpel vs. Dorman Products | Xpel vs. Standard Motor Products | Xpel vs. Motorcar Parts of | Xpel vs. Stoneridge |
| Standard vs. Dorman Products | Standard vs. Motorcar Parts of | Standard vs. Douglas Dynamics | Standard vs. Stoneridge |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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