Correlation Between Xometry and CSW Industrials

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

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

Diversification Opportunities for Xometry and CSW Industrials

-0.2

Correlation Coefficient

Xometry  CSW Industrials

Good diversification

The 3 months correlation between Xometry and CSW is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Xometry and CSW Industrials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSW Industrials and Xometry 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 Xometry are associated (or correlated) with CSW Industrials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSW Industrials has no effect on the direction of Xometry i.e., Xometry and CSW Industrials go up and down completely randomly.

Pair Corralation between Xometry and CSW Industrials

Given the investment horizon of 90 days Xometry is expected to under-perform the CSW Industrials. In addition to that, Xometry is 3.27 times more volatile than CSW Industrials. It trades about -0.35 of its total potential returns per unit of risk. CSW Industrials is currently generating about 0.46 per unit of volatility. If you would invest  35,736  in CSW Industrials on October 22, 2024 and sell it today you would earn a total of  3,285  from holding CSW Industrials or generate 9.19% return on investment over 90 days.

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

Xometry  vs.  CSW Industrials

Xometry

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xometry are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Xometry reported solid returns over the last few months and may actually be approaching a breakup point.

CSW Industrials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSW Industrials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, CSW Industrials is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Xometry and CSW Industrials

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

The idea behind Xometry and CSW Industrials 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.

Check out your portfolio center.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.