Correlation Between Xeros Technology and Alliance Data

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Can any of the company-specific risk be diversified away by investing in both Xeros Technology and Alliance Data 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 Xeros Technology and Alliance Data into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xeros Technology Group and Alliance Data Systems, you can compare the effects of market volatilities on Xeros Technology and Alliance Data 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 Xeros Technology with a short position of Alliance Data. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xeros Technology and Alliance Data.

Diversification Opportunities for Xeros Technology and Alliance Data

XerosAllianceDiversified AwayXerosAllianceDiversified Away100%
-0.05
  Correlation Coefficient

Good diversification

The 3 months correlation between Xeros and Alliance is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Xeros Technology Group and Alliance Data Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Data Systems and Xeros Technology 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 Xeros Technology Group are associated (or correlated) with Alliance Data. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Data Systems has no effect on the direction of Xeros Technology i.e., Xeros Technology and Alliance Data go up and down completely randomly.

Pair Corralation between Xeros Technology and Alliance Data

Assuming the 90 days trading horizon Xeros Technology Group is expected to under-perform the Alliance Data. In addition to that, Xeros Technology is 1.52 times more volatile than Alliance Data Systems. It trades about -0.03 of its total potential returns per unit of risk. Alliance Data Systems is currently generating about 0.05 per unit of volatility. If you would invest  3,472  in Alliance Data Systems on November 26, 2024 and sell it today you would earn a total of  2,176  from holding Alliance Data Systems or generate 62.67% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy83.57%
ValuesDaily Returns

Xeros Technology Group  vs.  Alliance Data Systems

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 050100150200
JavaScript chart by amCharts 3.21.15XSG 0HCR
       Timeline  
Xeros Technology 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Xeros Technology Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Xeros Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.40.60.811.21.4
Alliance Data Systems 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Alliance Data Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Alliance Data is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb565860626466

Xeros Technology and Alliance Data Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-22.36-16.74-11.13-5.520.06.2612.6319.025.37 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15XSG 0HCR
       Returns  

Pair Trading with Xeros Technology and Alliance Data

The main advantage of trading using opposite Xeros Technology and Alliance Data positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xeros Technology position performs unexpectedly, Alliance Data 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 Alliance Data will offset losses from the drop in Alliance Data's long position.
The idea behind Xeros Technology Group and Alliance Data Systems 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.
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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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