Correlation Between Xp and Interactive Brokers

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

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

Diversification Opportunities for Xp and Interactive Brokers

0.09

Correlation Coefficient

Xp  Interactive Brokers

Significant diversification

The 3 months correlation between Xp and Interactive is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Interactive Brokers Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Interactive Brokers and Xp 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 Xp Inc are associated (or correlated) with Interactive Brokers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Interactive Brokers has no effect on the direction of Xp i.e., Xp and Interactive Brokers go up and down completely randomly.

Pair Corralation between Xp and Interactive Brokers

Allowing for the 90-day total investment horizon Xp Inc is expected to generate 0.75 times more return on investment than Interactive Brokers. However, Xp Inc is 1.34 times less risky than Interactive Brokers. It trades about 0.16 of its potential returns per unit of risk. Interactive Brokers Group is currently generating about -0.02 per unit of risk. If you would invest  1,178  in Xp Inc on December 28, 2024 and sell it today you would earn a total of  302.00  from holding Xp Inc or generate 25.64% return on investment over 90 days.

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

Xp Inc  vs.  Interactive Brokers Group

Xp Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xp Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Xp reported solid returns over the last few months and may actually be approaching a breakup point.

Interactive Brokers

Risk-Adjusted Performance

Very Weak

Over the last 90 days Interactive Brokers Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable forward-looking signals, Interactive Brokers is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Xp and Interactive Brokers

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

The idea behind Xp Inc and Interactive Brokers 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.

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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.