Correlation Between Xcel Brands and Ricebran Tech

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

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

Diversification Opportunities for Xcel Brands and Ricebran Tech

0.27

Correlation Coefficient

Xcel Brands  Ricebran Tech

Modest diversification

The 3 months correlation between Xcel and Ricebran is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Brands and Ricebran Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ricebran Tech 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 Ricebran Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ricebran Tech has no effect on the direction of Xcel Brands i.e., Xcel Brands and Ricebran Tech go up and down completely randomly.

Pair Corralation between Xcel Brands and Ricebran Tech

If you would invest  70.00  in Xcel Brands on September 3, 2024 and sell it today you would lose (1.00) from holding Xcel Brands or give up 1.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	1.56%
Values	Daily Returns

Xcel Brands  vs.  Ricebran Tech

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 somewhat strong essential indicators, Xcel Brands is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ricebran Tech

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Xcel Brands and Ricebran Tech

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

The idea behind Xcel Brands and Ricebran Tech 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.