Correlation Between Xponential Fitness and RCS MediaGroup

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

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

Diversification Opportunities for Xponential Fitness and RCS MediaGroup

0.45

Correlation Coefficient

Xponential Fitness  RCS MediaGroup

Very weak diversification

The 3 months correlation between Xponential and RCS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and RCS MediaGroup SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RCS MediaGroup SpA 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 RCS MediaGroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RCS MediaGroup SpA has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and RCS MediaGroup go up and down completely randomly.

Pair Corralation between Xponential Fitness and RCS MediaGroup

Given the investment horizon of 90 days Xponential Fitness is expected to generate 1.97 times less return on investment than RCS MediaGroup. In addition to that, Xponential Fitness is 3.31 times more volatile than RCS MediaGroup SpA. It trades about 0.03 of its total potential returns per unit of risk. RCS MediaGroup SpA is currently generating about 0.19 per unit of volatility. If you would invest  79.00  in RCS MediaGroup SpA on September 14, 2024 and sell it today you would earn a total of  14.00  from holding RCS MediaGroup SpA or generate 17.72% return on investment over 90 days.

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

Xponential Fitness  vs.  RCS MediaGroup SpA

Xponential Fitness

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Xponential Fitness may actually be approaching a critical reversion point that can send shares even higher in January 2025.

RCS MediaGroup SpA

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, RCS MediaGroup reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xponential Fitness and RCS MediaGroup

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

The idea behind Xponential Fitness and RCS MediaGroup SpA 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.