Correlation Between UMF and Xtra Energy

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

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

Diversification Opportunities for UMF and Xtra Energy

0.14

Correlation Coefficient

UMF  Xtra Energy

Average diversification

The 3 months correlation between UMF and Xtra is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding UMF Group and Xtra Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtra Energy Corp and UMF 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 UMF Group are associated (or correlated) with Xtra Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtra Energy Corp has no effect on the direction of UMF i.e., UMF and Xtra Energy go up and down completely randomly.

Pair Corralation between UMF and Xtra Energy

If you would invest  14.00  in Xtra Energy Corp on October 8, 2024 and sell it today you would earn a total of  8.00  from holding Xtra Energy Corp or generate 57.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	2.5%
Values	Daily Returns

UMF Group  vs.  Xtra Energy Corp

UMF Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days UMF Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, UMF is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Xtra Energy Corp

Risk-Adjusted Performance

7 of 100

OK

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

Pair Trading with UMF and Xtra Energy

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

The idea behind UMF Group and Xtra Energy Corp 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.