Correlation Between United Guardian and Xtant Medical

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

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

Diversification Opportunities for United Guardian and Xtant Medical

0.85

Correlation Coefficient

United Guardian  Xtant Medical

Very poor diversification

The 3 months correlation between United and Xtant is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding United Guardian and Xtant Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtant Medical Holdings and United Guardian 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 United Guardian are associated (or correlated) with Xtant Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtant Medical Holdings has no effect on the direction of United Guardian i.e., United Guardian and Xtant Medical go up and down completely randomly.

Pair Corralation between United Guardian and Xtant Medical

Allowing for the 90-day total investment horizon United Guardian is expected to under-perform the Xtant Medical. But the stock apears to be less risky and, when comparing its historical volatility, United Guardian is 1.27 times less risky than Xtant Medical. The stock trades about -0.11 of its potential returns per unit of risk. The Xtant Medical Holdings is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  60.00  in Xtant Medical Holdings on October 11, 2024 and sell it today you would lose (13.00) from holding Xtant Medical Holdings or give up 21.67% of portfolio value over 90 days.

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

United Guardian  vs.  Xtant Medical Holdings

United Guardian

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Guardian has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Xtant Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtant Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with United Guardian and Xtant Medical

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

The idea behind United Guardian and Xtant Medical Holdings 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.