Correlation Between Xponential Fitness and Portillos
Can any of the company-specific risk be diversified away by investing in both Xponential Fitness and Portillos 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 Portillos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xponential Fitness and Portillos, you can compare the effects of market volatilities on Xponential Fitness and Portillos 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 Portillos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and Portillos.
Diversification Opportunities for Xponential Fitness and Portillos
-0.76 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xponential and Portillos is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Portillos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Portillos 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 Portillos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Portillos has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and Portillos go up and down completely randomly.
Pair Corralation between Xponential Fitness and Portillos
Given the investment horizon of 90 days Xponential Fitness is expected to generate 1.36 times more return on investment than Portillos. However, Xponential Fitness is 1.36 times more volatile than Portillos. It trades about -0.13 of its potential returns per unit of risk. Portillos is currently generating about -0.42 per unit of risk. If you would invest 1,570 in Xponential Fitness on September 13, 2024 and sell it today you would lose (132.00) from holding Xponential Fitness or give up 8.41% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xponential Fitness vs. Portillos
Performance |
| Timeline |
| Xponential Fitness |
| Portillos |
Xponential Fitness and Portillos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xponential Fitness and Portillos
The main advantage of trading using opposite Xponential Fitness and Portillos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness position performs unexpectedly, Portillos 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 Portillos will offset losses from the drop in Portillos' long position.The idea behind Xponential Fitness and Portillos 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.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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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