Correlation Between LuxUrban Hotels and Xponential Fitness

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

By analyzing existing cross correlation between LuxUrban Hotels 1300 and Xponential Fitness, you can compare the effects of market volatilities on LuxUrban Hotels 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 LuxUrban Hotels with a short position of Xponential Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of LuxUrban Hotels and Xponential Fitness.

Diversification Opportunities for LuxUrban Hotels and Xponential Fitness

0.32

Correlation Coefficient

LuxUrban Hotels  Xponential Fitness

Weak diversification

The 3 months correlation between LuxUrban and Xponential is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding LuxUrban Hotels 1300 and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and LuxUrban Hotels 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 LuxUrban Hotels 1300 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 LuxUrban Hotels i.e., LuxUrban Hotels and Xponential Fitness go up and down completely randomly.

Pair Corralation between LuxUrban Hotels and Xponential Fitness

Assuming the 90 days horizon LuxUrban Hotels is expected to generate 5.6 times less return on investment than Xponential Fitness. But when comparing it to its historical volatility, LuxUrban Hotels 1300 is 1.37 times less risky than Xponential Fitness. It trades about 0.03 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,191  in Xponential Fitness on October 6, 2024 and sell it today you would earn a total of  335.00  from holding Xponential Fitness or generate 28.13% return on investment over 90 days.

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

LuxUrban Hotels 1300  vs.  Xponential Fitness

LuxUrban Hotels 1300

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LuxUrban Hotels 1300 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, LuxUrban Hotels reported solid returns over the last few months and may actually be approaching a breakup point.

Xponential Fitness

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LuxUrban Hotels and Xponential Fitness

The main advantage of trading using opposite LuxUrban Hotels and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LuxUrban Hotels 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 LuxUrban Hotels 1300 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.

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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.