Correlation Between Ronin and XPLA

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

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

Diversification Opportunities for Ronin and XPLA

0.74

Correlation Coefficient

Ronin  XPLA

Poor diversification

The 3 months correlation between Ronin and XPLA is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Ronin and XPLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPLA and Ronin 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 Ronin are associated (or correlated) with XPLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPLA has no effect on the direction of Ronin i.e., Ronin and XPLA go up and down completely randomly.

Pair Corralation between Ronin and XPLA

Assuming the 90 days trading horizon Ronin is expected to generate 1.47 times more return on investment than XPLA. However, Ronin is 1.47 times more volatile than XPLA. It trades about 0.14 of its potential returns per unit of risk. XPLA is currently generating about 0.08 per unit of risk. If you would invest  150.00  in Ronin on September 2, 2024 and sell it today you would earn a total of  70.00  from holding Ronin or generate 46.67% return on investment over 90 days.

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

Ronin  vs.  XPLA

Ronin

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ronin are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Ronin exhibited solid returns over the last few months and may actually be approaching a breakup point.

XPLA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XPLA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, XPLA exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ronin and XPLA

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

The idea behind Ronin and XPLA 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..