Correlation Between CLST Holdings and Xtra Energy

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

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

Diversification Opportunities for CLST Holdings and Xtra Energy

0.21

Correlation Coefficient

CLST Holdings  Xtra Energy

Modest diversification

The 3 months correlation between CLST and Xtra is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding CLST 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 CLST Holdings 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 CLST 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 CLST Holdings i.e., CLST Holdings and Xtra Energy go up and down completely randomly.

Pair Corralation between CLST Holdings and Xtra Energy

Given the investment horizon of 90 days CLST Holdings is expected to generate 4.75 times more return on investment than Xtra Energy. However, CLST Holdings is 4.75 times more volatile than Xtra Energy Corp. It trades about 0.19 of its potential returns per unit of risk. Xtra Energy Corp is currently generating about -0.03 per unit of risk. If you would invest  2.10  in CLST Holdings on December 26, 2024 and sell it today you would earn a total of  2.40  from holding CLST Holdings or generate 114.29% return on investment over 90 days.

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

CLST Holdings  vs.  Xtra Energy Corp

CLST Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CLST Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak technical indicators, CLST Holdings 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 CLST Holdings and Xtra Energy

The main advantage of trading using opposite CLST Holdings and Xtra Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CLST Holdings 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 CLST 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.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.