Correlation Between Radcom and Xponential Fitness

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

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

Diversification Opportunities for Radcom and Xponential Fitness

0.6

Correlation Coefficient

Radcom  Xponential Fitness

Poor diversification

The 3 months correlation between Radcom and Xponential is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Radcom and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and Radcom 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 Radcom 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 Radcom i.e., Radcom and Xponential Fitness go up and down completely randomly.

Pair Corralation between Radcom and Xponential Fitness

Given the investment horizon of 90 days Radcom is expected to generate 0.79 times more return on investment than Xponential Fitness. However, Radcom is 1.27 times less risky than Xponential Fitness. It trades about 0.16 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.09 per unit of risk. If you would invest  1,181  in Radcom on October 17, 2024 and sell it today you would earn a total of  119.00  from holding Radcom or generate 10.08% return on investment over 90 days.

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

Radcom  vs.  Xponential Fitness

Radcom

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Radcom are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Radcom displayed solid returns over the last few months and may actually be approaching a breakup point.

Xponential Fitness

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 7 (%) 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 Radcom and Xponential Fitness

The main advantage of trading using opposite Radcom and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Radcom 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 Radcom 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.