Correlation Between Revolution Beauty and XLMedia PLC

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

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

Diversification Opportunities for Revolution Beauty and XLMedia PLC

-0.58

Correlation Coefficient

Revolution Beauty  XLMedia PLC

Excellent diversification

The 3 months correlation between Revolution and XLMedia is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Revolution Beauty Group and XLMedia PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XLMedia PLC and Revolution Beauty 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 Revolution Beauty Group are associated (or correlated) with XLMedia PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XLMedia PLC has no effect on the direction of Revolution Beauty i.e., Revolution Beauty and XLMedia PLC go up and down completely randomly.

Pair Corralation between Revolution Beauty and XLMedia PLC

Assuming the 90 days trading horizon Revolution Beauty Group is expected to generate 1.22 times more return on investment than XLMedia PLC. However, Revolution Beauty is 1.22 times more volatile than XLMedia PLC. It trades about 0.09 of its potential returns per unit of risk. XLMedia PLC is currently generating about 0.03 per unit of risk. If you would invest  1,592  in Revolution Beauty Group on October 12, 2024 and sell it today you would earn a total of  408.00  from holding Revolution Beauty Group or generate 25.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Revolution Beauty Group  vs.  XLMedia PLC

Revolution Beauty

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Revolution Beauty Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Revolution Beauty unveiled solid returns over the last few months and may actually be approaching a breakup point.

XLMedia PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, XLMedia PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Revolution Beauty and XLMedia PLC

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

The idea behind Revolution Beauty Group and XLMedia PLC 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.