Correlation Between Xos and Columbus McKinnon

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

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

Diversification Opportunities for Xos and Columbus McKinnon

-0.62

Correlation Coefficient

Xos  Columbus McKinnon

Excellent diversification

The 3 months correlation between Xos and Columbus is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Xos Inc and Columbus McKinnon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbus McKinnon and Xos 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 Xos Inc are associated (or correlated) with Columbus McKinnon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbus McKinnon has no effect on the direction of Xos i.e., Xos and Columbus McKinnon go up and down completely randomly.

Pair Corralation between Xos and Columbus McKinnon

Considering the 90-day investment horizon Xos Inc is expected to under-perform the Columbus McKinnon. In addition to that, Xos is 1.73 times more volatile than Columbus McKinnon. It trades about -0.08 of its total potential returns per unit of risk. Columbus McKinnon is currently generating about 0.21 per unit of volatility. If you would invest  3,007  in Columbus McKinnon on September 12, 2024 and sell it today you would earn a total of  1,012  from holding Columbus McKinnon or generate 33.65% return on investment over 90 days.

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

Xos Inc  vs.  Columbus McKinnon

Xos Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Columbus McKinnon

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Columbus McKinnon are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Columbus McKinnon displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xos and Columbus McKinnon

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

The idea behind Xos Inc and Columbus McKinnon 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.