Correlation Between Xcel Brands and FlexShopper

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

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

Diversification Opportunities for Xcel Brands and FlexShopper

-0.43

Correlation Coefficient

Xcel Brands  FlexShopper

Very good diversification

The 3 months correlation between Xcel and FlexShopper is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Brands and FlexShopper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FlexShopper 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 FlexShopper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FlexShopper has no effect on the direction of Xcel Brands i.e., Xcel Brands and FlexShopper go up and down completely randomly.

Pair Corralation between Xcel Brands and FlexShopper

Given the investment horizon of 90 days Xcel Brands is expected to generate 15.38 times less return on investment than FlexShopper. In addition to that, Xcel Brands is 1.5 times more volatile than FlexShopper. It trades about 0.0 of its total potential returns per unit of risk. FlexShopper is currently generating about 0.05 per unit of volatility. If you would invest  127.00  in FlexShopper on September 29, 2024 and sell it today you would earn a total of  23.00  from holding FlexShopper or generate 18.11% return on investment over 90 days.

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

Xcel Brands  vs.  FlexShopper

Xcel Brands

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xcel Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

FlexShopper

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShopper are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, FlexShopper showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xcel Brands and FlexShopper

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

The idea behind Xcel Brands and FlexShopper 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.