Correlation Between Xcel Brands and Appian Corp

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

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

Diversification Opportunities for Xcel Brands and Appian Corp

0.68

Correlation Coefficient

Xcel Brands  Appian Corp

Poor diversification

The 3 months correlation between Xcel and Appian is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Brands and Appian Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appian Corp and Xcel Brands 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 Xcel Brands are associated (or correlated) with Appian Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appian Corp has no effect on the direction of Xcel Brands i.e., Xcel Brands and Appian Corp go up and down completely randomly.

Pair Corralation between Xcel Brands and Appian Corp

Given the investment horizon of 90 days Xcel Brands is expected to under-perform the Appian Corp. In addition to that, Xcel Brands is 1.63 times more volatile than Appian Corp. It trades about -0.01 of its total potential returns per unit of risk. Appian Corp is currently generating about -0.01 per unit of volatility. If you would invest  3,343  in Appian Corp on December 27, 2024 and sell it today you would lose (147.00) from holding Appian Corp or give up 4.4% of portfolio value over 90 days.

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

Xcel Brands  vs.  Appian Corp

Xcel Brands

Risk-Adjusted Performance

Very Weak

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

Appian Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Appian Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Appian Corp is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Xcel Brands and Appian Corp

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

The idea behind Xcel Brands and Appian 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.