Correlation Between Hashicorp and XBP Europe

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

By analyzing existing cross correlation between Hashicorp and XBP Europe Holdings, you can compare the effects of market volatilities on Hashicorp and XBP Europe 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 Hashicorp with a short position of XBP Europe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hashicorp and XBP Europe.

Diversification Opportunities for Hashicorp and XBP Europe

-0.32

Correlation Coefficient

Hashicorp  XBP Europe

Very good diversification

The 3 months correlation between Hashicorp and XBP is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hashicorp and XBP Europe Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XBP Europe Holdings and Hashicorp 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 Hashicorp are associated (or correlated) with XBP Europe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XBP Europe Holdings has no effect on the direction of Hashicorp i.e., Hashicorp and XBP Europe go up and down completely randomly.

Pair Corralation between Hashicorp and XBP Europe

Considering the 90-day investment horizon Hashicorp is expected to generate 24.53 times less return on investment than XBP Europe. But when comparing it to its historical volatility, Hashicorp is 32.91 times less risky than XBP Europe. It trades about 0.06 of its potential returns per unit of risk. XBP Europe Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  107.00  in XBP Europe Holdings on September 30, 2024 and sell it today you would earn a total of  4.00  from holding XBP Europe Holdings or generate 3.74% return on investment over 90 days.

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

Hashicorp  vs.  XBP Europe Holdings

Hashicorp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hashicorp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Hashicorp is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

XBP Europe Holdings

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in XBP Europe Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain fundamental drivers, XBP Europe reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hashicorp and XBP Europe

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

The idea behind Hashicorp and XBP Europe Holdings 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.