Correlation Between XVG and SYS

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

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

Diversification Opportunities for XVG and SYS

0.66

Correlation Coefficient

XVG  SYS

Poor diversification

The 3 months correlation between XVG and SYS is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding XVG and SYS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SYS and XVG 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 XVG are associated (or correlated) with SYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SYS has no effect on the direction of XVG i.e., XVG and SYS go up and down completely randomly.

Pair Corralation between XVG and SYS

Assuming the 90 days trading horizon XVG is expected to generate 1.38 times more return on investment than SYS. However, XVG is 1.38 times more volatile than SYS. It trades about 0.16 of its potential returns per unit of risk. SYS is currently generating about 0.11 per unit of risk. If you would invest  0.34  in XVG on September 2, 2024 and sell it today you would earn a total of  0.36  from holding XVG or generate 104.8% return on investment over 90 days.

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

XVG  vs.  SYS

XVG

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in XVG are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, XVG exhibited solid returns over the last few months and may actually be approaching a breakup point.

SYS

Risk-Adjusted Performance

9 of 100

OK

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

Pair Trading with XVG and SYS

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

The idea behind XVG and SYS 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.