Correlation Between XWELL and Bright Horizons

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

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

Diversification Opportunities for XWELL and Bright Horizons

0.6

Correlation Coefficient

XWELL  Bright Horizons

Poor diversification

The 3 months correlation between XWELL and Bright is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding XWELL Inc and Bright Horizons Family in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bright Horizons Family and XWELL 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 XWELL Inc are associated (or correlated) with Bright Horizons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bright Horizons Family has no effect on the direction of XWELL i.e., XWELL and Bright Horizons go up and down completely randomly.

Pair Corralation between XWELL and Bright Horizons

Given the investment horizon of 90 days XWELL Inc is expected to under-perform the Bright Horizons. In addition to that, XWELL is 1.81 times more volatile than Bright Horizons Family. It trades about -0.11 of its total potential returns per unit of risk. Bright Horizons Family is currently generating about -0.13 per unit of volatility. If you would invest  13,940  in Bright Horizons Family on September 3, 2024 and sell it today you would lose (2,377) from holding Bright Horizons Family or give up 17.05% of portfolio value over 90 days.

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

XWELL Inc  vs.  Bright Horizons Family

XWELL Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XWELL Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Bright Horizons Family

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bright Horizons Family has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with XWELL and Bright Horizons

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

The idea behind XWELL Inc and Bright Horizons Family 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.