Correlation Between Noble Plc and Almacenes Xito

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

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

Diversification Opportunities for Noble Plc and Almacenes Xito

0.14

Correlation Coefficient

Noble Plc  Almacenes Xito

Average diversification

The 3 months correlation between Noble and Almacenes is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Noble plc 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 Noble Plc 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 Noble plc 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 Noble Plc i.e., Noble Plc and Almacenes Xito go up and down completely randomly.

Pair Corralation between Noble Plc and Almacenes Xito

Allowing for the 90-day total investment horizon Noble plc is expected to under-perform the Almacenes Xito. In addition to that, Noble Plc is 1.25 times more volatile than Almacenes xito SA. It trades about -0.05 of its total potential returns per unit of risk. Almacenes xito SA is currently generating about -0.05 per unit of volatility. If you would invest  416.00  in Almacenes xito SA on September 14, 2024 and sell it today you would lose (27.00) from holding Almacenes xito SA or give up 6.49% of portfolio value over 90 days.

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

Noble plc  vs.  Almacenes xito SA

Noble plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noble plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Noble Plc and Almacenes Xito

The main advantage of trading using opposite Noble Plc and Almacenes Xito positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Noble Plc 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 Noble plc 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.

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