Correlation Between XBP Europe and Tenable Holdings

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

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

Diversification Opportunities for XBP Europe and Tenable Holdings

-0.02

Correlation Coefficient

XBP Europe  Tenable Holdings

Good diversification

The 3 months correlation between XBP and Tenable is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding XBP Europe Holdings and Tenable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenable Holdings and XBP Europe 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 XBP Europe Holdings are associated (or correlated) with Tenable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenable Holdings has no effect on the direction of XBP Europe i.e., XBP Europe and Tenable Holdings go up and down completely randomly.

Pair Corralation between XBP Europe and Tenable Holdings

Assuming the 90 days horizon XBP Europe Holdings is expected to generate 15.78 times more return on investment than Tenable Holdings. However, XBP Europe is 15.78 times more volatile than Tenable Holdings. It trades about 0.12 of its potential returns per unit of risk. Tenable Holdings is currently generating about 0.02 per unit of risk. If you would invest  8.00  in XBP Europe Holdings on October 1, 2024 and sell it today you would lose (4.00) from holding XBP Europe Holdings or give up 50.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	67.82%
Values	Daily Returns

XBP Europe Holdings  vs.  Tenable Holdings

XBP Europe Holdings

Risk-Adjusted Performance

17 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in XBP Europe Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, XBP Europe showed solid returns over the last few months and may actually be approaching a breakup point.

Tenable Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenable Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tenable Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with XBP Europe and Tenable Holdings

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

The idea behind XBP Europe Holdings and Tenable 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.