Correlation Between Xponential Fitness and Danakali
Can any of the company-specific risk be diversified away by investing in both Xponential Fitness and Danakali 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 Danakali into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xponential Fitness and Danakali, you can compare the effects of market volatilities on Xponential Fitness and Danakali 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 Danakali. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and Danakali.
Diversification Opportunities for Xponential Fitness and Danakali
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Xponential and Danakali is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Danakali in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danakali 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 Danakali. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danakali has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and Danakali go up and down completely randomly.
Pair Corralation between Xponential Fitness and Danakali
Given the investment horizon of 90 days Xponential Fitness is expected to generate 3.08 times less return on investment than Danakali. But when comparing it to its historical volatility, Xponential Fitness is 2.41 times less risky than Danakali. It trades about 0.04 of its potential returns per unit of risk. Danakali is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 30.00 in Danakali on September 14, 2024 and sell it today you would lose (13.00) from holding Danakali or give up 43.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 67.07% |
| Values | Daily Returns |
Xponential Fitness vs. Danakali
Performance |
| Timeline |
| Xponential Fitness |
| Danakali |
Xponential Fitness and Danakali Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xponential Fitness and Danakali
The main advantage of trading using opposite Xponential Fitness and Danakali positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness position performs unexpectedly, Danakali 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 Danakali will offset losses from the drop in Danakali's long position.The idea behind Xponential Fitness and Danakali 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.| Danakali vs. Mid Atlantic Home Health | Danakali vs. MI Homes | Danakali vs. SL Green Realty | Danakali vs. Xponential Fitness |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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