Correlation Between Xponential Fitness and NL Industries
Can any of the company-specific risk be diversified away by investing in both Xponential Fitness and NL Industries 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 NL Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xponential Fitness and NL Industries, you can compare the effects of market volatilities on Xponential Fitness and NL Industries 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 NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and NL Industries.
Diversification Opportunities for Xponential Fitness and NL Industries
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Xponential and NL Industries is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries 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 NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and NL Industries go up and down completely randomly.
Pair Corralation between Xponential Fitness and NL Industries
Given the investment horizon of 90 days Xponential Fitness is expected to generate 2.01 times more return on investment than NL Industries. However, Xponential Fitness is 2.01 times more volatile than NL Industries. It trades about 0.16 of its potential returns per unit of risk. NL Industries is currently generating about 0.09 per unit of risk. If you would invest 1,261 in Xponential Fitness on September 3, 2024 and sell it today you would earn a total of 263.00 from holding Xponential Fitness or generate 20.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xponential Fitness vs. NL Industries
Performance |
| Timeline |
| Xponential Fitness |
| NL Industries |
Xponential Fitness and NL Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xponential Fitness and NL Industries
The main advantage of trading using opposite Xponential Fitness and NL Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness position performs unexpectedly, NL Industries 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 NL Industries will offset losses from the drop in NL Industries' long position.| Xponential Fitness vs. Planet Fitness | Xponential Fitness vs. JAKKS Pacific | Xponential Fitness vs. Mattel Inc | Xponential Fitness vs. OneSpaWorld Holdings |
| NL Industries vs. Brinks Company | NL Industries vs. Allegion PLC | NL Industries vs. Resideo Technologies | NL Industries vs. Mistras Group |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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