Correlation Between Xponential Fitness and BANDAI NAMCO
Can any of the company-specific risk be diversified away by investing in both Xponential Fitness and BANDAI NAMCO 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 Xponential Fitness and BANDAI NAMCO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xponential Fitness and BANDAI NAMCO Holdings, you can compare the effects of market volatilities on Xponential Fitness and BANDAI NAMCO 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 Xponential Fitness with a short position of BANDAI NAMCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and BANDAI NAMCO.
Diversification Opportunities for Xponential Fitness and BANDAI NAMCO
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xponential and BANDAI is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and BANDAI NAMCO Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANDAI NAMCO Holdings and Xponential Fitness 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 Xponential Fitness are associated (or correlated) with BANDAI NAMCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANDAI NAMCO Holdings has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and BANDAI NAMCO go up and down completely randomly.
Pair Corralation between Xponential Fitness and BANDAI NAMCO
Given the investment horizon of 90 days Xponential Fitness is expected to generate 34.78 times less return on investment than BANDAI NAMCO. But when comparing it to its historical volatility, Xponential Fitness is 5.32 times less risky than BANDAI NAMCO. It trades about 0.01 of its potential returns per unit of risk. BANDAI NAMCO Holdings is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,104 in BANDAI NAMCO Holdings on September 2, 2024 and sell it today you would earn a total of 16.00 from holding BANDAI NAMCO Holdings or generate 0.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 64.72% |
| Values | Daily Returns |
Xponential Fitness vs. BANDAI NAMCO Holdings
Performance |
| Timeline |
| Xponential Fitness |
| BANDAI NAMCO Holdings |
Xponential Fitness and BANDAI NAMCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xponential Fitness and BANDAI NAMCO
The main advantage of trading using opposite Xponential Fitness and BANDAI NAMCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness position performs unexpectedly, BANDAI NAMCO 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 BANDAI NAMCO will offset losses from the drop in BANDAI NAMCO's long position.The idea behind Xponential Fitness and BANDAI NAMCO Holdings 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.| BANDAI NAMCO vs. Shimano Inc ADR | BANDAI NAMCO vs. Yamaha Corp DRC | BANDAI NAMCO vs. Vista Outdoor | BANDAI NAMCO vs. Hasbro Inc |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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