Correlation Between AXS TSLA and X Square

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

By analyzing existing cross correlation between AXS TSLA Bear and X Square Balanced, you can compare the effects of market volatilities on AXS TSLA and X Square 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 AXS TSLA with a short position of X Square. Check out your portfolio center. Please also check ongoing floating volatility patterns of AXS TSLA and X Square.

Diversification Opportunities for AXS TSLA and X Square

-0.27

Correlation Coefficient

AXS TSLA  X Square

Very good diversification

The 3 months correlation between AXS and SQCBX is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding AXS TSLA Bear and X Square Balanced in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Square Balanced and AXS TSLA 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 AXS TSLA Bear are associated (or correlated) with X Square. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Square Balanced has no effect on the direction of AXS TSLA i.e., AXS TSLA and X Square go up and down completely randomly.

Pair Corralation between AXS TSLA and X Square

Given the investment horizon of 90 days AXS TSLA Bear is expected to generate 132.7 times more return on investment than X Square. However, AXS TSLA is 132.7 times more volatile than X Square Balanced. It trades about 0.1 of its potential returns per unit of risk. X Square Balanced is currently generating about 0.22 per unit of risk. If you would invest  3,019  in AXS TSLA Bear on September 3, 2024 and sell it today you would earn a total of  1,286  from holding AXS TSLA Bear or generate 42.6% return on investment over 90 days.

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

AXS TSLA Bear  vs.  X Square Balanced

AXS TSLA Bear

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AXS TSLA Bear are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, AXS TSLA reported solid returns over the last few months and may actually be approaching a breakup point.

X Square Balanced

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in X Square Balanced are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile fundamental drivers, X Square may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AXS TSLA and X Square

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

The idea behind AXS TSLA Bear and X Square Balanced 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.