Correlation Between Eclectic Bar and Xeros Technology

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

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

Diversification Opportunities for Eclectic Bar and Xeros Technology

-0.54

Correlation Coefficient

Eclectic Bar  Xeros Technology

Excellent diversification

The 3 months correlation between Eclectic and Xeros is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Eclectic Bar Group and Xeros Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xeros Technology and Eclectic Bar 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 Eclectic Bar Group are associated (or correlated) with Xeros Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xeros Technology has no effect on the direction of Eclectic Bar i.e., Eclectic Bar and Xeros Technology go up and down completely randomly.

Pair Corralation between Eclectic Bar and Xeros Technology

Assuming the 90 days trading horizon Eclectic Bar Group is expected to generate 4.08 times more return on investment than Xeros Technology. However, Eclectic Bar is 4.08 times more volatile than Xeros Technology Group. It trades about 0.11 of its potential returns per unit of risk. Xeros Technology Group is currently generating about -0.25 per unit of risk. If you would invest  2,650  in Eclectic Bar Group on September 26, 2024 and sell it today you would earn a total of  2,050  from holding Eclectic Bar Group or generate 77.36% return on investment over 90 days.

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

Eclectic Bar Group  vs.  Xeros Technology Group

Eclectic Bar Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Eclectic Bar Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Eclectic Bar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Xeros Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xeros Technology Group 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 technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Eclectic Bar and Xeros Technology

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

The idea behind Eclectic Bar Group and Xeros Technology Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.