Correlation Between IPower and Almacenes Xito

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

By analyzing existing cross correlation between iPower Inc and Almacenes xito SA, you can compare the effects of market volatilities on IPower and Almacenes Xito 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 IPower with a short position of Almacenes Xito. Check out your portfolio center. Please also check ongoing floating volatility patterns of IPower and Almacenes Xito.

Diversification Opportunities for IPower and Almacenes Xito

0.73

Correlation Coefficient

IPower  Almacenes Xito

Poor diversification

The 3 months correlation between IPower and Almacenes is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding iPower Inc and Almacenes xito SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Almacenes xito SA and IPower 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 iPower Inc are associated (or correlated) with Almacenes Xito. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Almacenes xito SA has no effect on the direction of IPower i.e., IPower and Almacenes Xito go up and down completely randomly.

Pair Corralation between IPower and Almacenes Xito

Considering the 90-day investment horizon iPower Inc is expected to generate 4.83 times more return on investment than Almacenes Xito. However, IPower is 4.83 times more volatile than Almacenes xito SA. It trades about 0.16 of its potential returns per unit of risk. Almacenes xito SA is currently generating about 0.04 per unit of risk. If you would invest  69.00  in iPower Inc on September 22, 2024 and sell it today you would earn a total of  17.00  from holding iPower Inc or generate 24.64% return on investment over 90 days.

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

iPower Inc  vs.  Almacenes xito SA

iPower Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iPower Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the fund sophisticated investors.

Almacenes xito SA

Risk-Adjusted Performance

0 of 100

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 very healthy basic indicators, Almacenes Xito is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with IPower and Almacenes Xito

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

The idea behind iPower Inc and Almacenes xito SA 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.

Check out your portfolio center.

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 Global Correlations module to find global opportunities by holding instruments from different markets.