Correlation Between Xponential Fitness and RadNet

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

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

Diversification Opportunities for Xponential Fitness and RadNet

0.91

Correlation Coefficient

Xponential Fitness  RadNet

Almost no diversification

The 3 months correlation between Xponential and RadNet is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and RadNet Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RadNet Inc 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 RadNet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RadNet Inc has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and RadNet go up and down completely randomly.

Pair Corralation between Xponential Fitness and RadNet

Given the investment horizon of 90 days Xponential Fitness is expected to generate 1.53 times more return on investment than RadNet. However, Xponential Fitness is 1.53 times more volatile than RadNet Inc. It trades about 0.06 of its potential returns per unit of risk. RadNet Inc is currently generating about 0.03 per unit of risk. If you would invest  1,220  in Xponential Fitness on September 25, 2024 and sell it today you would earn a total of  163.00  from holding Xponential Fitness or generate 13.36% 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.  RadNet Inc

Xponential Fitness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 4 (%) 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.

RadNet Inc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in RadNet Inc are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, RadNet is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Xponential Fitness and RadNet

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

The idea behind Xponential Fitness and RadNet Inc 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.