Correlation Between XLMedia PLC and HubSpot

Can any of the company-specific risk be diversified away by investing in both XLMedia PLC and HubSpot 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 XLMedia PLC and HubSpot into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between XLMedia PLC and HubSpot, you can compare the effects of market volatilities on XLMedia PLC and HubSpot 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 XLMedia PLC with a short position of HubSpot. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and HubSpot.

Diversification Opportunities for XLMedia PLC and HubSpot

0.83

Correlation Coefficient

XLMedia PLC  HubSpot

Very poor diversification

The 3 months correlation between XLMedia and HubSpot is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and HubSpot in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HubSpot and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with HubSpot. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HubSpot has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and HubSpot go up and down completely randomly.

Pair Corralation between XLMedia PLC and HubSpot

Assuming the 90 days horizon XLMedia PLC is expected to generate 1.37 times less return on investment than HubSpot. In addition to that, XLMedia PLC is 2.51 times more volatile than HubSpot. It trades about 0.02 of its total potential returns per unit of risk. HubSpot is currently generating about 0.08 per unit of volatility. If you would invest  29,255  in HubSpot on September 3, 2024 and sell it today you would earn a total of  38,825  from holding HubSpot or generate 132.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

XLMedia PLC  vs.  HubSpot

XLMedia PLC

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, XLMedia PLC reported solid returns over the last few months and may actually be approaching a breakup point.

HubSpot

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in HubSpot are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, HubSpot reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XLMedia PLC and HubSpot

The main advantage of trading using opposite XLMedia PLC and HubSpot positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XLMedia PLC position performs unexpectedly, HubSpot 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 HubSpot will offset losses from the drop in HubSpot's long position.

The idea behind XLMedia PLC and HubSpot 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.