Correlation Between Xp and Evergreen Corp

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

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

Diversification Opportunities for Xp and Evergreen Corp

-0.74

Correlation Coefficient

Xp  Evergreen Corp

Pay attention - limited upside

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

Pair Corralation between Xp and Evergreen Corp

Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the Evergreen Corp. In addition to that, Xp is 29.13 times more volatile than Evergreen Corp. It trades about -0.27 of its total potential returns per unit of risk. Evergreen Corp is currently generating about 0.16 per unit of volatility. If you would invest  1,178  in Evergreen Corp on September 23, 2024 and sell it today you would earn a total of  8.00  from holding Evergreen Corp or generate 0.68% return on investment over 90 days.

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

Xp Inc  vs.  Evergreen Corp

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. Even with inconsistent performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Evergreen Corp

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Evergreen Corp are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Evergreen Corp is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Xp and Evergreen Corp

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

The idea behind Xp Inc and Evergreen 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.

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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.