Correlation Between Charter Communications and Xp

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

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

Diversification Opportunities for Charter Communications and Xp

-0.51

Correlation Coefficient

Charter Communications  Xp

Excellent diversification

The 3 months correlation between Charter and Xp is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Charter Communications and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc and Charter Communications 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 Charter Communications are associated (or correlated) with Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Charter Communications i.e., Charter Communications and Xp go up and down completely randomly.

Pair Corralation between Charter Communications and Xp

Assuming the 90 days trading horizon Charter Communications is expected to generate 1.34 times more return on investment than Xp. However, Charter Communications is 1.34 times more volatile than Xp Inc. It trades about 0.13 of its potential returns per unit of risk. Xp Inc is currently generating about -0.18 per unit of risk. If you would invest  3,249  in Charter Communications on September 3, 2024 and sell it today you would earn a total of  733.00  from holding Charter Communications or generate 22.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Charter Communications  vs.  Xp Inc

Charter Communications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Charter Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Charter Communications sustained solid returns over the last few months and may actually be approaching a breakup point.

Xp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Charter Communications and Xp

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

The idea behind Charter Communications and Xp Inc 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.