Correlation Between Four Seasons and Xponential Fitness

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

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

Diversification Opportunities for Four Seasons and Xponential Fitness

-0.52

Correlation Coefficient

Four Seasons  Xponential Fitness

Excellent diversification

The 3 months correlation between Four and Xponential is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Four Seasons 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 Four Seasons Education 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 Four Seasons i.e., Four Seasons and Xponential Fitness go up and down completely randomly.

Pair Corralation between Four Seasons and Xponential Fitness

Given the investment horizon of 90 days Four Seasons Education is expected to generate 13.64 times more return on investment than Xponential Fitness. However, Four Seasons is 13.64 times more volatile than Xponential Fitness. It trades about 0.08 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.04 per unit of risk. If you would invest  791.00  in Four Seasons Education on September 24, 2024 and sell it today you would earn a total of  244.00  from holding Four Seasons Education or generate 30.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.98%
Values	Daily Returns

Four Seasons Education  vs.  Xponential Fitness

Four Seasons Education

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Xponential Fitness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Four Seasons and Xponential Fitness

The main advantage of trading using opposite Four Seasons and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Seasons 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 Four Seasons Education 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.