Correlation Between XLMedia PLC and Revolution Beauty

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

By analyzing existing cross correlation between XLMedia PLC and Revolution Beauty Group, you can compare the effects of market volatilities on XLMedia PLC and Revolution Beauty 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 XLMedia PLC with a short position of Revolution Beauty. Check out your portfolio center. Please also check ongoing floating volatility patterns of XLMedia PLC and Revolution Beauty.

Diversification Opportunities for XLMedia PLC and Revolution Beauty

-0.57

Correlation Coefficient

XLMedia PLC  Revolution Beauty

Excellent diversification

The 3 months correlation between XLMedia and Revolution is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding XLMedia PLC and Revolution Beauty Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Revolution Beauty and XLMedia PLC 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 XLMedia PLC are associated (or correlated) with Revolution Beauty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Revolution Beauty has no effect on the direction of XLMedia PLC i.e., XLMedia PLC and Revolution Beauty go up and down completely randomly.

Pair Corralation between XLMedia PLC and Revolution Beauty

Assuming the 90 days trading horizon XLMedia PLC is expected to generate 3.3 times less return on investment than Revolution Beauty. In addition to that, XLMedia PLC is 1.42 times more volatile than Revolution Beauty Group. It trades about 0.0 of its total potential returns per unit of risk. Revolution Beauty Group is currently generating about 0.02 per unit of volatility. If you would invest  1,900  in Revolution Beauty Group on October 12, 2024 and sell it today you would earn a total of  100.00  from holding Revolution Beauty Group or generate 5.26% return on investment over 90 days.

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

XLMedia PLC  vs.  Revolution Beauty Group

XLMedia PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XLMedia PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, XLMedia PLC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Revolution Beauty

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Revolution Beauty Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Revolution Beauty unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with XLMedia PLC and Revolution Beauty

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

The idea behind XLMedia PLC and Revolution Beauty Group 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.