Correlation Between X Trade and Echo Investment
Can any of the company-specific risk be diversified away by investing in both X Trade and Echo Investment 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 X Trade and Echo Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between X Trade Brokers and Echo Investment SA, you can compare the effects of market volatilities on X Trade and Echo Investment 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 X Trade with a short position of Echo Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Trade and Echo Investment.
Diversification Opportunities for X Trade and Echo Investment
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between XTB and Echo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding X Trade Brokers and Echo Investment SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Echo Investment SA and X Trade 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 X Trade Brokers are associated (or correlated) with Echo Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Echo Investment SA has no effect on the direction of X Trade i.e., X Trade and Echo Investment go up and down completely randomly.
Pair Corralation between X Trade and Echo Investment
Assuming the 90 days trading horizon X Trade Brokers is expected to generate 1.43 times more return on investment than Echo Investment. However, X Trade is 1.43 times more volatile than Echo Investment SA. It trades about 0.1 of its potential returns per unit of risk. Echo Investment SA is currently generating about 0.07 per unit of risk. If you would invest 2,389 in X Trade Brokers on August 24, 2024 and sell it today you would earn a total of 4,607 from holding X Trade Brokers or generate 192.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
X Trade Brokers vs. Echo Investment SA
Performance |
| Timeline |
| X Trade Brokers |
| Echo Investment SA |
X Trade and Echo Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with X Trade and Echo Investment
The main advantage of trading using opposite X Trade and Echo Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if X Trade position performs unexpectedly, Echo Investment 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 Echo Investment will offset losses from the drop in Echo Investment's long position.| X Trade vs. Santander Bank Polska | X Trade vs. Quantum Software SA | X Trade vs. Bank Millennium SA | X Trade vs. Gamedust SA |
| Echo Investment vs. Poznanska Korporacja Budowlana | Echo Investment vs. Esotiq Henderson SA | Echo Investment vs. Toya SA | Echo Investment vs. Betacom SA |
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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