Correlation Between Xp and Stonex

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

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

Diversification Opportunities for Xp and Stonex

0.81

Correlation Coefficient

Xp  Stonex

Very poor diversification

The 3 months correlation between Xp and Stonex is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Stonex Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stonex Group 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 Stonex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stonex Group has no effect on the direction of Xp i.e., Xp and Stonex go up and down completely randomly.

Pair Corralation between Xp and Stonex

Allowing for the 90-day total investment horizon Xp Inc is expected to generate 1.07 times more return on investment than Stonex. However, Xp is 1.07 times more volatile than Stonex Group. It trades about 0.14 of its potential returns per unit of risk. Stonex Group is currently generating about 0.13 per unit of risk. If you would invest  1,218  in Xp Inc on December 26, 2024 and sell it today you would earn a total of  268.00  from holding Xp Inc or generate 22.0% return on investment over 90 days.

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

Xp Inc  vs.  Stonex 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 11 (%) 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.

Stonex Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Stonex Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Stonex showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Xp and Stonex

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

The idea behind Xp Inc and Stonex 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.