Correlation Between RCS MediaGroup and Xponential Fitness

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

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

Diversification Opportunities for RCS MediaGroup and Xponential Fitness

0.54

Correlation Coefficient

RCS MediaGroup  Xponential Fitness

Very weak diversification

The 3 months correlation between RCS and Xponential is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding RCS MediaGroup SpA and Xponential Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xponential Fitness and RCS MediaGroup 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 RCS MediaGroup SpA 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 RCS MediaGroup i.e., RCS MediaGroup and Xponential Fitness go up and down completely randomly.

Pair Corralation between RCS MediaGroup and Xponential Fitness

Assuming the 90 days horizon RCS MediaGroup SpA is expected to generate 1.08 times more return on investment than Xponential Fitness. However, RCS MediaGroup is 1.08 times more volatile than Xponential Fitness. It trades about 0.04 of its potential returns per unit of risk. Xponential Fitness is currently generating about 0.0 per unit of risk. If you would invest  68.00  in RCS MediaGroup SpA on September 30, 2024 and sell it today you would earn a total of  20.00  from holding RCS MediaGroup SpA or generate 29.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	67.81%
Values	Daily Returns

RCS MediaGroup SpA  vs.  Xponential Fitness

RCS MediaGroup SpA

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in RCS MediaGroup SpA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, RCS MediaGroup is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Xponential Fitness

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with RCS MediaGroup and Xponential Fitness

The main advantage of trading using opposite RCS MediaGroup and Xponential Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCS MediaGroup 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 RCS MediaGroup SpA 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.