Correlation Between XPO Logistics and Pharming Group
Can any of the company-specific risk be diversified away by investing in both XPO Logistics and Pharming Group 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 XPO Logistics and Pharming Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XPO Logistics and Pharming Group NV, you can compare the effects of market volatilities on XPO Logistics and Pharming Group 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 XPO Logistics with a short position of Pharming Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of XPO Logistics and Pharming Group.
Diversification Opportunities for XPO Logistics and Pharming Group
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XPO and Pharming is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding XPO Logistics and Pharming Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pharming Group NV and XPO Logistics 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 XPO Logistics are associated (or correlated) with Pharming Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pharming Group NV has no effect on the direction of XPO Logistics i.e., XPO Logistics and Pharming Group go up and down completely randomly.
Pair Corralation between XPO Logistics and Pharming Group
Considering the 90-day investment horizon XPO Logistics is expected to generate 1.59 times more return on investment than Pharming Group. However, XPO Logistics is 1.59 times more volatile than Pharming Group NV. It trades about 0.12 of its potential returns per unit of risk. Pharming Group NV is currently generating about -0.04 per unit of risk. If you would invest 13,292 in XPO Logistics on October 23, 2024 and sell it today you would earn a total of 523.00 from holding XPO Logistics or generate 3.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
XPO Logistics vs. Pharming Group NV
Performance |
| Timeline |
| XPO Logistics |
| Pharming Group NV |
XPO Logistics and Pharming Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XPO Logistics and Pharming Group
The main advantage of trading using opposite XPO Logistics and Pharming Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XPO Logistics position performs unexpectedly, Pharming Group 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 Pharming Group will offset losses from the drop in Pharming Group's long position.| XPO Logistics vs. Knight Transportation | XPO Logistics vs. Schneider National | XPO Logistics vs. Heartland Express | XPO Logistics vs. Saia Inc |
| Pharming Group vs. Garibaldi Resources Corp | Pharming Group vs. IGG Inc | Pharming Group vs. Sino Biopharmaceutical Limited |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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