Correlation Between AECOM TECHNOLOGY and XTANT MEDICAL

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

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

Diversification Opportunities for AECOM TECHNOLOGY and XTANT MEDICAL

-0.79

Correlation Coefficient

AECOM TECHNOLOGY  XTANT MEDICAL

Pay attention - limited upside

The 3 months correlation between AECOM and XTANT is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding AECOM TECHNOLOGY and XTANT MEDICAL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XTANT MEDICAL HLDGS and AECOM TECHNOLOGY 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 AECOM TECHNOLOGY are associated (or correlated) with XTANT MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XTANT MEDICAL HLDGS has no effect on the direction of AECOM TECHNOLOGY i.e., AECOM TECHNOLOGY and XTANT MEDICAL go up and down completely randomly.

Pair Corralation between AECOM TECHNOLOGY and XTANT MEDICAL

Assuming the 90 days trading horizon AECOM TECHNOLOGY is expected to generate 3.66 times less return on investment than XTANT MEDICAL. But when comparing it to its historical volatility, AECOM TECHNOLOGY is 2.99 times less risky than XTANT MEDICAL. It trades about 0.07 of its potential returns per unit of risk. XTANT MEDICAL HLDGS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  39.00  in XTANT MEDICAL HLDGS on October 6, 2024 and sell it today you would earn a total of  5.00  from holding XTANT MEDICAL HLDGS or generate 12.82% return on investment over 90 days.

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

AECOM TECHNOLOGY  vs.  XTANT MEDICAL HLDGS

AECOM TECHNOLOGY

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AECOM TECHNOLOGY are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, AECOM TECHNOLOGY may actually be approaching a critical reversion point that can send shares even higher in February 2025.

XTANT MEDICAL HLDGS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XTANT MEDICAL HLDGS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with AECOM TECHNOLOGY and XTANT MEDICAL

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

The idea behind AECOM TECHNOLOGY and XTANT MEDICAL HLDGS 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.