Correlation Between Playstudios and Xponential Fitness

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

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

Diversification Opportunities for Playstudios and Xponential Fitness

0.72

Correlation Coefficient

Playstudios  Xponential Fitness

Poor diversification

The 3 months correlation between Playstudios and Xponential is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Playstudios and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Playstudios 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 Playstudios 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 Playstudios i.e., Playstudios and Xponential Fitness go up and down completely randomly.

Pair Corralation between Playstudios and Xponential Fitness

Given the investment horizon of 90 days Playstudios is expected to generate 0.75 times more return on investment than Xponential Fitness. However, Playstudios is 1.33 times less risky than Xponential Fitness. It trades about 0.17 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.05 per unit of risk. If you would invest  149.00  in Playstudios on September 24, 2024 and sell it today you would earn a total of  63.00  from holding Playstudios or generate 42.28% return on investment over 90 days.

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

Playstudios  vs.  Xponential Fitness

Playstudios

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Playstudios are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Playstudios unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xponential Fitness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 4 (%) 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 Playstudios and Xponential Fitness

The main advantage of trading using opposite Playstudios and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Playstudios 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 Playstudios 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.