Correlation Between Xometry and John Bean

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

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

Diversification Opportunities for Xometry and John Bean

0.8

Correlation Coefficient

Xometry  John Bean

Very poor diversification

The 3 months correlation between Xometry and John is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Xometry and John Bean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on John Bean Technologies 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 John Bean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of John Bean Technologies has no effect on the direction of Xometry i.e., Xometry and John Bean go up and down completely randomly.

Pair Corralation between Xometry and John Bean

Given the investment horizon of 90 days Xometry is expected to generate 1.54 times more return on investment than John Bean. However, Xometry is 1.54 times more volatile than John Bean Technologies. It trades about 0.34 of its potential returns per unit of risk. John Bean Technologies is currently generating about 0.14 per unit of risk. If you would invest  1,737  in Xometry on October 7, 2024 and sell it today you would earn a total of  2,583  from holding Xometry or generate 148.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Xometry  vs.  John Bean Technologies

Xometry

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Xometry are ranked lower than 26 (%) 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.

John Bean Technologies

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in John Bean Technologies are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental drivers, John Bean unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xometry and John Bean

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

The idea behind Xometry and John Bean Technologies 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.