Correlation Between Four Leaf and Xponential Fitness

Can any of the company-specific risk be diversified away by investing in both Four Leaf 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 Leaf 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 Leaf Acquisition and Xponential Fitness, you can compare the effects of market volatilities on Four Leaf 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 Leaf with a short position of Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Four Leaf and Xponential Fitness.

Diversification Opportunities for Four Leaf and Xponential Fitness

0.35

Correlation Coefficient

Four Leaf  Xponential Fitness

Weak diversification

The 3 months correlation between Four and Xponential is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Four Leaf Acquisition and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Four Leaf 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 Leaf Acquisition 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 Leaf i.e., Four Leaf and Xponential Fitness go up and down completely randomly.

Pair Corralation between Four Leaf and Xponential Fitness

Assuming the 90 days horizon Four Leaf is expected to generate 149.57 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, Four Leaf Acquisition is 424.55 times less risky than Xponential Fitness. It trades about 0.12 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,224  in Xponential Fitness on September 26, 2024 and sell it today you would earn a total of  83.00  from holding Xponential Fitness or generate 6.78% return on investment over 90 days.

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

Four Leaf Acquisition  vs.  Xponential Fitness

Four Leaf Acquisition

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Four Leaf Acquisition are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Four Leaf is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Xponential Fitness

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 3 (%) 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 Leaf and Xponential Fitness

The main advantage of trading using opposite Four Leaf and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Four Leaf 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 Leaf Acquisition 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.