Correlation Between XLMedia PLC and SLR Investment

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

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

Diversification Opportunities for XLMedia PLC and SLR Investment

0.81

Correlation Coefficient

XLMedia PLC  SLR Investment

Very poor diversification

The 3 months correlation between XLMedia and SLR is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and SLR Investment Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SLR Investment Corp 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 SLR Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SLR Investment Corp has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and SLR Investment go up and down completely randomly.

Pair Corralation between XLMedia PLC and SLR Investment

Assuming the 90 days horizon XLMedia PLC is expected to generate 2.41 times more return on investment than SLR Investment. However, XLMedia PLC is 2.41 times more volatile than SLR Investment Corp. It trades about 0.13 of its potential returns per unit of risk. SLR Investment Corp is currently generating about 0.14 per unit of risk. If you would invest  11.00  in XLMedia PLC on September 3, 2024 and sell it today you would earn a total of  3.00  from holding XLMedia PLC or generate 27.27% 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.  SLR Investment Corp

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.

SLR Investment Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SLR Investment Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SLR Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with XLMedia PLC and SLR Investment

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

The idea behind XLMedia PLC and SLR Investment Corp 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.