Correlation Between Xponential Fitness and Empresa Distribuidora

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

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

Diversification Opportunities for Xponential Fitness and Empresa Distribuidora

0.76

Correlation Coefficient

Xponential Fitness  Empresa Distribuidora

Poor diversification

The 3 months correlation between Xponential and Empresa is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Empresa Distribuidora y in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Empresa Distribuidora 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 Empresa Distribuidora. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Empresa Distribuidora has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and Empresa Distribuidora go up and down completely randomly.

Pair Corralation between Xponential Fitness and Empresa Distribuidora

Given the investment horizon of 90 days Xponential Fitness is expected to generate 2.59 times less return on investment than Empresa Distribuidora. In addition to that, Xponential Fitness is 1.86 times more volatile than Empresa Distribuidora y. It trades about 0.11 of its total potential returns per unit of risk. Empresa Distribuidora y is currently generating about 0.54 per unit of volatility. If you would invest  2,185  in Empresa Distribuidora y on September 5, 2024 and sell it today you would earn a total of  1,896  from holding Empresa Distribuidora y or generate 86.77% return on investment over 90 days.

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

Xponential Fitness  vs.  Empresa Distribuidora y

Xponential Fitness

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 6 (%) 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.

Empresa Distribuidora

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Empresa Distribuidora y are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of very weak fundamental indicators, Empresa Distribuidora displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xponential Fitness and Empresa Distribuidora

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

The idea behind Xponential Fitness and Empresa Distribuidora y 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.