Correlation Between AuthID and XBP Europe

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

By analyzing existing cross correlation between authID Inc and XBP Europe Holdings, you can compare the effects of market volatilities on AuthID and XBP Europe 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 AuthID with a short position of XBP Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of AuthID and XBP Europe.

Diversification Opportunities for AuthID and XBP Europe

-0.17

Correlation Coefficient

AuthID  XBP Europe

Good diversification

The 3 months correlation between AuthID and XBP is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding authID Inc and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings and AuthID 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 authID Inc are associated (or correlated) with XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of AuthID i.e., AuthID and XBP Europe go up and down completely randomly.

Pair Corralation between AuthID and XBP Europe

Given the investment horizon of 90 days authID Inc is expected to generate 2.24 times more return on investment than XBP Europe. However, AuthID is 2.24 times more volatile than XBP Europe Holdings. It trades about 0.1 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about -0.06 per unit of risk. If you would invest  555.00  in authID Inc on October 6, 2024 and sell it today you would earn a total of  69.00  from holding authID Inc or generate 12.43% return on investment over 90 days.

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

authID Inc  vs.  XBP Europe Holdings

authID Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in authID Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, AuthID may actually be approaching a critical reversion point that can send shares even higher in February 2025.

XBP Europe Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XBP Europe Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively conflicting fundamental drivers, XBP Europe may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with AuthID and XBP Europe

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

The idea behind authID Inc and XBP Europe Holdings 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.