Correlation Between ARB IOT and Xerox Corp

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both ARB IOT and Xerox Corp 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 ARB IOT and Xerox Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ARB IOT Group and Xerox Corp, you can compare the effects of market volatilities on ARB IOT and Xerox Corp 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 ARB IOT with a short position of Xerox Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of ARB IOT and Xerox Corp.

Diversification Opportunities for ARB IOT and Xerox Corp

-0.58
  Correlation Coefficient

Excellent diversification

The 3 months correlation between ARB and Xerox is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding ARB IOT Group and Xerox Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xerox Corp and ARB IOT 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 ARB IOT Group are associated (or correlated) with Xerox Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xerox Corp has no effect on the direction of ARB IOT i.e., ARB IOT and Xerox Corp go up and down completely randomly.

Pair Corralation between ARB IOT and Xerox Corp

Given the investment horizon of 90 days ARB IOT Group is expected to generate 4.06 times more return on investment than Xerox Corp. However, ARB IOT is 4.06 times more volatile than Xerox Corp. It trades about 0.05 of its potential returns per unit of risk. Xerox Corp is currently generating about -0.04 per unit of risk. If you would invest  55.00  in ARB IOT Group on October 7, 2024 and sell it today you would lose (1.00) from holding ARB IOT Group or give up 1.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

ARB IOT Group  vs.  Xerox Corp

 Performance 
       Timeline  
ARB IOT Group 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in ARB IOT Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile fundamental drivers, ARB IOT sustained solid returns over the last few months and may actually be approaching a breakup point.
Xerox Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Xerox Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

ARB IOT and Xerox Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ARB IOT and Xerox Corp

The main advantage of trading using opposite ARB IOT and Xerox Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ARB IOT position performs unexpectedly, Xerox Corp 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 Xerox Corp will offset losses from the drop in Xerox Corp's long position.
The idea behind ARB IOT Group and Xerox 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.
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.

Other Complementary Tools

Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Equity Analysis
Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Stocks Directory
Find actively traded stocks across global markets