Correlation Between XTM and Global Develpmts
Can any of the company-specific risk be diversified away by investing in both XTM and Global Develpmts 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 XTM and Global Develpmts into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between XTM Inc and Global Develpmts, you can compare the effects of market volatilities on XTM and Global Develpmts 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 XTM with a short position of Global Develpmts. Check out your portfolio center. Please also check ongoing floating volatility patterns of XTM and Global Develpmts.
Diversification Opportunities for XTM and Global Develpmts
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between XTM and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding XTM Inc and Global Develpmts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Develpmts and XTM 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 XTM Inc are associated (or correlated) with Global Develpmts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Develpmts has no effect on the direction of XTM i.e., XTM and Global Develpmts go up and down completely randomly.
Pair Corralation between XTM and Global Develpmts
Assuming the 90 days horizon XTM Inc is expected to generate 4.87 times more return on investment than Global Develpmts. However, XTM is 4.87 times more volatile than Global Develpmts. It trades about 0.09 of its potential returns per unit of risk. Global Develpmts is currently generating about 0.06 per unit of risk. If you would invest 5.82 in XTM Inc on September 4, 2024 and sell it today you would lose (0.03) from holding XTM Inc or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
XTM Inc vs. Global Develpmts
Performance |
| Timeline |
| XTM Inc |
| Global Develpmts |
XTM and Global Develpmts Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with XTM and Global Develpmts
The main advantage of trading using opposite XTM and Global Develpmts positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XTM position performs unexpectedly, Global Develpmts 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 Global Develpmts will offset losses from the drop in Global Develpmts' long position.The idea behind XTM Inc and Global Develpmts 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.| Global Develpmts vs. Manaris Corp | Global Develpmts vs. Green Planet Bio | Global Develpmts vs. Continental Beverage Brands | Global Develpmts vs. Opus Magnum Ameris |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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