Correlation Between Arsenal Digital and Xtra Energy

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

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

Diversification Opportunities for Arsenal Digital and Xtra Energy

0.46

Correlation Coefficient

Arsenal Digital  Xtra Energy

Very weak diversification

The 3 months correlation between Arsenal and Xtra is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Arsenal Digital Holdings and Xtra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Energy Corp and Arsenal Digital 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 Arsenal Digital Holdings are associated (or correlated) with Xtra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Energy Corp has no effect on the direction of Arsenal Digital i.e., Arsenal Digital and Xtra Energy go up and down completely randomly.

Pair Corralation between Arsenal Digital and Xtra Energy

Given the investment horizon of 90 days Arsenal Digital Holdings is expected to generate 1.24 times more return on investment than Xtra Energy. However, Arsenal Digital is 1.24 times more volatile than Xtra Energy Corp. It trades about 0.03 of its potential returns per unit of risk. Xtra Energy Corp is currently generating about -0.06 per unit of risk. If you would invest  5.61  in Arsenal Digital Holdings on December 28, 2024 and sell it today you would lose (0.60) from holding Arsenal Digital Holdings or give up 10.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.36%
Values	Daily Returns

Arsenal Digital Holdings  vs.  Xtra Energy Corp

Arsenal Digital Holdings

Risk-Adjusted Performance

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Arsenal Digital Holdings are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Arsenal Digital demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Xtra Energy Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xtra Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Arsenal Digital and Xtra Energy

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

The idea behind Arsenal Digital Holdings and Xtra Energy Corp 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.