Correlation Between Xos and Xos Equity

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

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

Diversification Opportunities for Xos and Xos Equity

0.53

Correlation Coefficient

Xos  Xos Equity

Very weak diversification

The 3 months correlation between Xos and Xos is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Xos Inc and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants and Xos 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 Xos Inc are associated (or correlated) with Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of Xos i.e., Xos and Xos Equity go up and down completely randomly.

Pair Corralation between Xos and Xos Equity

Considering the 90-day investment horizon Xos is expected to generate 4.36 times less return on investment than Xos Equity. But when comparing it to its historical volatility, Xos Inc is 1.75 times less risky than Xos Equity. It trades about 0.06 of its potential returns per unit of risk. Xos Equity Warrants is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  0.50  in Xos Equity Warrants on December 26, 2024 and sell it today you would earn a total of  0.59  from holding Xos Equity Warrants or generate 118.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	96.72%
Values	Daily Returns

Xos Inc  vs.  Xos Equity Warrants

Xos Inc

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Xos unveiled solid returns over the last few months and may actually be approaching a breakup point.

Xos Equity Warrants

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Equity Warrants are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Xos Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xos and Xos Equity

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

The idea behind Xos Inc and Xos Equity Warrants 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.