Correlation Between Xponential Fitness and Waste Management
Can any of the company-specific risk be diversified away by investing in both Xponential Fitness and Waste Management 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 Waste Management into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xponential Fitness and Waste Management, you can compare the effects of market volatilities on Xponential Fitness and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and Waste Management.
Diversification Opportunities for Xponential Fitness and Waste Management
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Xponential and Waste is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and Waste Management go up and down completely randomly.
Pair Corralation between Xponential Fitness and Waste Management
Given the investment horizon of 90 days Xponential Fitness is expected to generate 8.25 times more return on investment than Waste Management. However, Xponential Fitness is 8.25 times more volatile than Waste Management. It trades about 0.16 of its potential returns per unit of risk. Waste Management is currently generating about 0.36 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xponential Fitness vs. Waste Management
Performance |
| Timeline |
| Xponential Fitness |
| Waste Management |
Xponential Fitness and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xponential Fitness and Waste Management
The main advantage of trading using opposite Xponential Fitness and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xponential Fitness position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Xponential Fitness vs. Planet Fitness | Xponential Fitness vs. JAKKS Pacific | Xponential Fitness vs. Mattel Inc | Xponential Fitness vs. OneSpaWorld Holdings |
| Waste Management vs. Waste Connections | Waste Management vs. Clean Harbors | Waste Management vs. Casella Waste Systems | Waste Management vs. Gfl Environmental Holdings |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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