Correlation Between Allient and Xponential Fitness

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

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

Diversification Opportunities for Allient and Xponential Fitness

0.82

Correlation Coefficient

Allient  Xponential Fitness

Very poor diversification

The 3 months correlation between Allient and Xponential is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Allient and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Allient 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 Allient are associated (or correlated) with Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Allient i.e., Allient and Xponential Fitness go up and down completely randomly.

Pair Corralation between Allient and Xponential Fitness

Given the investment horizon of 90 days Allient is expected to under-perform the Xponential Fitness. But the stock apears to be less risky and, when comparing its historical volatility, Allient is 1.86 times less risky than Xponential Fitness. The stock trades about -0.02 of its potential returns per unit of risk. The Xponential Fitness is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  2,505  in Xponential Fitness on October 5, 2024 and sell it today you would lose (1,160) from holding Xponential Fitness or give up 46.31% of portfolio value over 90 days.

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

Allient  vs.  Xponential Fitness

Allient

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xponential Fitness

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Allient and Xponential Fitness

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

The idea behind Allient and Xponential Fitness 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.