Correlation Between Interactive Brokers and Xp

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

By analyzing existing cross correlation between Interactive Brokers Group and Xp Inc, you can compare the effects of market volatilities on Interactive Brokers and Xp 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 Interactive Brokers with a short position of Xp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Interactive Brokers and Xp.

Diversification Opportunities for Interactive Brokers and Xp

-0.68

Correlation Coefficient

Interactive Brokers  Xp

Excellent diversification

The 3 months correlation between Interactive and Xp is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Interactive Brokers Group and Xp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xp Inc and Interactive Brokers 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 Interactive Brokers Group are associated (or correlated) with Xp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xp Inc has no effect on the direction of Interactive Brokers i.e., Interactive Brokers and Xp go up and down completely randomly.

Pair Corralation between Interactive Brokers and Xp

Given the investment horizon of 90 days Interactive Brokers Group is expected to generate 0.61 times more return on investment than Xp. However, Interactive Brokers Group is 1.65 times less risky than Xp. It trades about 0.13 of its potential returns per unit of risk. Xp Inc is currently generating about 0.02 per unit of risk. If you would invest  7,527  in Interactive Brokers Group on October 5, 2024 and sell it today you would earn a total of  10,845  from holding Interactive Brokers Group or generate 144.08% return on investment over 90 days.

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

Interactive Brokers Group  vs.  Xp Inc

Interactive Brokers

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Interactive Brokers Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak forward-looking signals, Interactive Brokers reported solid returns over the last few months and may actually be approaching a breakup point.

Xp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Interactive Brokers and Xp

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

The idea behind Interactive Brokers Group and Xp Inc 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.