Correlation Between Worthington Steel and Xylo Technologies

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

By analyzing existing cross correlation between Worthington Steel and Xylo Technologies, you can compare the effects of market volatilities on Worthington Steel and Xylo Technologies 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 Worthington Steel with a short position of Xylo Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Worthington Steel and Xylo Technologies.

Diversification Opportunities for Worthington Steel and Xylo Technologies

-0.17

Correlation Coefficient

Worthington Steel  Xylo Technologies

Good diversification

The 3 months correlation between Worthington and Xylo is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Worthington Steel and Xylo Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xylo Technologies and Worthington Steel 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 Worthington Steel are associated (or correlated) with Xylo Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xylo Technologies has no effect on the direction of Worthington Steel i.e., Worthington Steel and Xylo Technologies go up and down completely randomly.

Pair Corralation between Worthington Steel and Xylo Technologies

Allowing for the 90-day total investment horizon Worthington Steel is expected to under-perform the Xylo Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Worthington Steel is 1.67 times less risky than Xylo Technologies. The stock trades about -0.02 of its potential returns per unit of risk. The Xylo Technologies is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  307.00  in Xylo Technologies on October 10, 2024 and sell it today you would earn a total of  119.00  from holding Xylo Technologies or generate 38.76% return on investment over 90 days.

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

Worthington Steel  vs.  Xylo Technologies

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Worthington Steel is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Xylo Technologies

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xylo Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal essential indicators, Xylo Technologies displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Worthington Steel and Xylo Technologies

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

The idea behind Worthington Steel and Xylo Technologies 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.

Check out your portfolio center.

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.