Correlation Between Almacenes Xito and Retailing Fund

Can any of the company-specific risk be diversified away by investing in both Almacenes Xito and Retailing 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 Retailing 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 Retailing Fund Class, you can compare the effects of market volatilities on Almacenes Xito and Retailing 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 Retailing Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Almacenes Xito and Retailing Fund.

Diversification Opportunities for Almacenes Xito and Retailing Fund

0.0

Correlation Coefficient

Almacenes Xito  Retailing Fund

Pay attention - limited upside

The 3 months correlation between Almacenes and Retailing is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Almacenes xito SA and Retailing Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Retailing 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 Retailing Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Retailing Fund Class has no effect on the direction of Almacenes Xito i.e., Almacenes Xito and Retailing Fund go up and down completely randomly.

Pair Corralation between Almacenes Xito and Retailing Fund

Given the investment horizon of 90 days Almacenes xito SA is expected to generate 2.97 times more return on investment than Retailing Fund. However, Almacenes Xito is 2.97 times more volatile than Retailing Fund Class. It trades about -0.03 of its potential returns per unit of risk. Retailing Fund Class is currently generating about -0.1 per unit of risk. If you would invest  377.00  in Almacenes xito SA on December 23, 2024 and sell it today you would lose (30.00) from holding Almacenes xito SA or give up 7.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	88.52%
Values	Daily Returns

Almacenes xito SA  vs.  Retailing Fund Class

Almacenes xito SA

Risk-Adjusted Performance

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Retailing Fund Class

Risk-Adjusted Performance

Very Weak

Over the last 90 days Retailing Fund Class has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Almacenes Xito and Retailing Fund

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

The idea behind Almacenes xito SA and Retailing 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .