Correlation Between Almacenes Xito and Leisure Fund

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

By analyzing existing cross correlation between Almacenes xito SA and Leisure Fund Class, you can compare the effects of market volatilities on Almacenes Xito and Leisure Fund 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 Almacenes Xito with a short position of Leisure Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almacenes Xito and Leisure Fund.

Diversification Opportunities for Almacenes Xito and Leisure Fund

-0.64

Correlation Coefficient

Almacenes Xito  Leisure Fund

Excellent diversification

The 3 months correlation between Almacenes and Leisure is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Almacenes xito SA and Leisure Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leisure Fund Class and Almacenes Xito 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 Almacenes xito SA are associated (or correlated) with Leisure Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leisure Fund Class has no effect on the direction of Almacenes Xito i.e., Almacenes Xito and Leisure Fund go up and down completely randomly.

Pair Corralation between Almacenes Xito and Leisure Fund

Given the investment horizon of 90 days Almacenes xito SA is expected to under-perform the Leisure Fund. In addition to that, Almacenes Xito is 4.27 times more volatile than Leisure Fund Class. It trades about -0.08 of its total potential returns per unit of risk. Leisure Fund Class is currently generating about 0.1 per unit of volatility. If you would invest  7,643  in Leisure Fund Class on October 6, 2024 and sell it today you would earn a total of  366.00  from holding Leisure Fund Class or generate 4.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Almacenes xito SA  vs.  Leisure Fund Class

Almacenes xito SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Almacenes xito SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Leisure Fund Class

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Leisure Fund Class are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Leisure Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Almacenes Xito and Leisure Fund

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

The idea behind Almacenes xito SA and Leisure Fund Class 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.