Correlation Between Smart Share and Xponential Fitness

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

By analyzing existing cross correlation between Smart Share Global and Xponential Fitness, you can compare the effects of market volatilities on Smart Share and Xponential Fitness 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 Smart Share with a short position of Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smart Share and Xponential Fitness.

Diversification Opportunities for Smart Share and Xponential Fitness

0.01

Correlation Coefficient

Smart Share  Xponential Fitness

Significant diversification

The 3 months correlation between Smart and Xponential is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Smart Share Global and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Smart Share 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 Smart Share Global are associated (or correlated) with Xponential Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xponential Fitness has no effect on the direction of Smart Share i.e., Smart Share and Xponential Fitness go up and down completely randomly.

Pair Corralation between Smart Share and Xponential Fitness

Allowing for the 90-day total investment horizon Smart Share Global is expected to generate 1.07 times more return on investment than Xponential Fitness. However, Smart Share is 1.07 times more volatile than Xponential Fitness. It trades about 0.13 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.02 per unit of risk. If you would invest  53.00  in Smart Share Global on September 12, 2024 and sell it today you would earn a total of  21.00  from holding Smart Share Global or generate 39.62% return on investment over 90 days.

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

Smart Share Global  vs.  Xponential Fitness

Smart Share Global

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smart Share Global are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Smart Share displayed solid returns over the last few months and may actually be approaching a breakup point.

Xponential Fitness

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Smart Share and Xponential Fitness

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

The idea behind Smart Share Global and Xponential Fitness 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.