Correlation Between Xponential Fitness and Deluxe

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

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

Diversification Opportunities for Xponential Fitness and Deluxe

0.92

Correlation Coefficient

Xponential Fitness  Deluxe

Almost no diversification

The 3 months correlation between Xponential and Deluxe is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Deluxe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Deluxe and Xponential Fitness 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 Xponential Fitness are associated (or correlated) with Deluxe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Deluxe has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and Deluxe go up and down completely randomly.

Pair Corralation between Xponential Fitness and Deluxe

Given the investment horizon of 90 days Xponential Fitness is expected to generate 1.38 times less return on investment than Deluxe. In addition to that, Xponential Fitness is 2.06 times more volatile than Deluxe. It trades about 0.04 of its total potential returns per unit of risk. Deluxe is currently generating about 0.12 per unit of volatility. If you would invest  1,893  in Deluxe on September 26, 2024 and sell it today you would earn a total of  339.00  from holding Deluxe or generate 17.91% return on investment over 90 days.

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

Xponential Fitness  vs.  Deluxe

Xponential Fitness

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

Deluxe

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Deluxe are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Deluxe showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xponential Fitness and Deluxe

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

The idea behind Xponential Fitness and Deluxe 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.