Correlation Between Xp and MidCap Financial
Can any of the company-specific risk be diversified away by investing in both Xp and MidCap Financial 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 MidCap Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xp Inc and MidCap Financial Investment, you can compare the effects of market volatilities on Xp and MidCap Financial 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 MidCap Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xp and MidCap Financial.
Diversification Opportunities for Xp and MidCap Financial
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Xp and MidCap is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and MidCap Financial Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MidCap Financial Inv 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 MidCap Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MidCap Financial Inv has no effect on the direction of Xp i.e., Xp and MidCap Financial go up and down completely randomly.
Pair Corralation between Xp and MidCap Financial
Allowing for the 90-day total investment horizon Xp Inc is expected to generate 6.13 times more return on investment than MidCap Financial. However, Xp is 6.13 times more volatile than MidCap Financial Investment. It trades about 0.06 of its potential returns per unit of risk. MidCap Financial Investment is currently generating about -0.01 per unit of risk. If you would invest 1,318 in Xp Inc on December 1, 2024 and sell it today you would earn a total of 97.00 from holding Xp Inc or generate 7.36% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.33% |
Values | Daily Returns |
Xp Inc vs. MidCap Financial Investment
Performance |
Timeline |
Xp Inc |
MidCap Financial Inv |
Xp and MidCap Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Xp and MidCap Financial
The main advantage of trading using opposite Xp and MidCap Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xp position performs unexpectedly, MidCap Financial 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 MidCap Financial will offset losses from the drop in MidCap Financial's long position.Xp vs. Up Fintech Holding | Xp vs. Bit Digital | Xp vs. Marathon Digital Holdings | Xp vs. MarketAxess Holdings |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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