Correlation Between TradeUP Acquisition and Xos Equity

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

By analyzing existing cross correlation between TradeUP Acquisition Corp and Xos Equity Warrants, you can compare the effects of market volatilities on TradeUP Acquisition and Xos Equity 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 TradeUP Acquisition with a short position of Xos Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of TradeUP Acquisition and Xos Equity.

Diversification Opportunities for TradeUP Acquisition and Xos Equity

0.0

Correlation Coefficient

TradeUP Acquisition  Xos Equity

Pay attention - limited upside

The 3 months correlation between TradeUP and Xos is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TradeUP Acquisition Corp and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants and TradeUP Acquisition 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 TradeUP Acquisition Corp are associated (or correlated) with Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of TradeUP Acquisition i.e., TradeUP Acquisition and Xos Equity go up and down completely randomly.

Pair Corralation between TradeUP Acquisition and Xos Equity

Assuming the 90 days horizon TradeUP Acquisition is expected to generate 1.7 times less return on investment than Xos Equity. But when comparing it to its historical volatility, TradeUP Acquisition Corp is 3.23 times less risky than Xos Equity. It trades about 0.13 of its potential returns per unit of risk. Xos Equity Warrants is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  9.00  in Xos Equity Warrants on October 27, 2024 and sell it today you would lose (8.05) from holding Xos Equity Warrants or give up 89.44% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	10.62%
Values	Daily Returns

TradeUP Acquisition Corp  vs.  Xos Equity Warrants

TradeUP Acquisition Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TradeUP Acquisition Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental indicators, TradeUP Acquisition is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Xos Equity Warrants

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Equity Warrants are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xos Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TradeUP Acquisition and Xos Equity

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

The idea behind TradeUP Acquisition Corp and Xos Equity Warrants 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.