Correlation Between Dell Technologies and XAAR PLC

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

By analyzing existing cross correlation between Dell Technologies and XAAR PLC LS 10, you can compare the effects of market volatilities on Dell Technologies and XAAR PLC 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 Dell Technologies with a short position of XAAR PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dell Technologies and XAAR PLC.

Diversification Opportunities for Dell Technologies and XAAR PLC

-0.43

Correlation Coefficient

Dell Technologies  XAAR PLC

Very good diversification

The 3 months correlation between Dell and XAAR is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Dell Technologies and XAAR PLC LS 10 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XAAR PLC LS and Dell Technologies 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 Dell Technologies are associated (or correlated) with XAAR PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XAAR PLC LS has no effect on the direction of Dell Technologies i.e., Dell Technologies and XAAR PLC go up and down completely randomly.

Pair Corralation between Dell Technologies and XAAR PLC

Assuming the 90 days trading horizon Dell Technologies is expected to generate 1.1 times more return on investment than XAAR PLC. However, Dell Technologies is 1.1 times more volatile than XAAR PLC LS 10. It trades about -0.01 of its potential returns per unit of risk. XAAR PLC LS 10 is currently generating about -0.17 per unit of risk. If you would invest  12,828  in Dell Technologies on September 27, 2024 and sell it today you would lose (1,410) from holding Dell Technologies or give up 10.99% of portfolio value over 90 days.

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

Dell Technologies  vs.  XAAR PLC LS 10

Dell Technologies

Risk-Adjusted Performance

2 of 100

Weak

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

XAAR PLC LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XAAR PLC LS 10 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 basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Dell Technologies and XAAR PLC

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

The idea behind Dell Technologies and XAAR PLC LS 10 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 Anywhere module to track or share privately all of your investments from the convenience of any device.