Correlation Between Energy and Xylo Technologies

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

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

Diversification Opportunities for Energy and Xylo Technologies

0.05

Correlation Coefficient

Energy  Xylo Technologies

Significant diversification

The 3 months correlation between Energy and Xylo is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Energy and Environmental and Xylo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xylo Technologies and Energy 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 Energy and Environmental are associated (or correlated) with Xylo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xylo Technologies has no effect on the direction of Energy i.e., Energy and Xylo Technologies go up and down completely randomly.

Pair Corralation between Energy and Xylo Technologies

Given the investment horizon of 90 days Energy and Environmental is expected to under-perform the Xylo Technologies. But the pink sheet apears to be less risky and, when comparing its historical volatility, Energy and Environmental is 1.27 times less risky than Xylo Technologies. The pink sheet trades about -0.09 of its potential returns per unit of risk. The Xylo Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  365.00  in Xylo Technologies on October 10, 2024 and sell it today you would earn a total of  61.00  from holding Xylo Technologies or generate 16.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Energy and Environmental  vs.  Xylo Technologies

Energy and Environmental

Risk-Adjusted Performance

1 of 100

Weak

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

Xylo Technologies

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xylo Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Xylo Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Energy and Xylo Technologies

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

The idea behind Energy and Environmental and Xylo Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.