Correlation Between Xos Equity and Doubledown Interactive

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

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

Diversification Opportunities for Xos Equity and Doubledown Interactive

0.61

Correlation Coefficient

Xos Equity  Doubledown Interactive

Poor diversification

The 3 months correlation between Xos and Doubledown is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Xos Equity Warrants and Doubledown Interactive Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Doubledown Interactive and Xos Equity 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 Equity Warrants are associated (or correlated) with Doubledown Interactive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Doubledown Interactive has no effect on the direction of Xos Equity i.e., Xos Equity and Doubledown Interactive go up and down completely randomly.

Pair Corralation between Xos Equity and Doubledown Interactive

Assuming the 90 days horizon Xos Equity Warrants is expected to generate 6.54 times more return on investment than Doubledown Interactive. However, Xos Equity is 6.54 times more volatile than Doubledown Interactive Co. It trades about 0.03 of its potential returns per unit of risk. Doubledown Interactive Co is currently generating about -0.21 per unit of risk. If you would invest  2.24  in Xos Equity Warrants on October 6, 2024 and sell it today you would lose (1.24) from holding Xos Equity Warrants or give up 55.36% of portfolio value over 90 days.

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

Xos Equity Warrants  vs.  Doubledown Interactive Co

Xos Equity Warrants

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Equity Warrants has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly fragile basic indicators, Xos Equity may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Doubledown Interactive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Doubledown Interactive Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Xos Equity and Doubledown Interactive

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

The idea behind Xos Equity Warrants and Doubledown Interactive Co 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.