Correlation Between Xponential Fitness and OneSpaWorld Holdings

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

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

Diversification Opportunities for Xponential Fitness and OneSpaWorld Holdings

0.64

Correlation Coefficient

Xponential Fitness  OneSpaWorld Holdings

Poor diversification

The 3 months correlation between Xponential and OneSpaWorld is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and OneSpaWorld Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OneSpaWorld Holdings 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 OneSpaWorld Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OneSpaWorld Holdings has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and OneSpaWorld Holdings go up and down completely randomly.

Pair Corralation between Xponential Fitness and OneSpaWorld Holdings

Given the investment horizon of 90 days Xponential Fitness is expected to generate 2.97 times more return on investment than OneSpaWorld Holdings. However, Xponential Fitness is 2.97 times more volatile than OneSpaWorld Holdings. It trades about 0.09 of its potential returns per unit of risk. OneSpaWorld Holdings is currently generating about 0.23 per unit of risk. If you would invest  1,253  in Xponential Fitness on September 4, 2024 and sell it today you would earn a total of  297.00  from holding Xponential Fitness or generate 23.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Xponential Fitness  vs.  OneSpaWorld Holdings

Xponential Fitness

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

OneSpaWorld Holdings

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in OneSpaWorld Holdings are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, OneSpaWorld Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xponential Fitness and OneSpaWorld Holdings

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

The idea behind Xponential Fitness and OneSpaWorld Holdings 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.