Correlation Between Xp and Yotta Acquisition

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

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

Diversification Opportunities for Xp and Yotta Acquisition

-0.07

Correlation Coefficient

Xp  Yotta Acquisition

Good diversification

The 3 months correlation between Xp and Yotta is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Xp Inc and Yotta Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yotta Acquisition 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 Yotta Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yotta Acquisition has no effect on the direction of Xp i.e., Xp and Yotta Acquisition go up and down completely randomly.

Pair Corralation between Xp and Yotta Acquisition

Allowing for the 90-day total investment horizon Xp Inc is expected to under-perform the Yotta Acquisition. But the stock apears to be less risky and, when comparing its historical volatility, Xp Inc is 89.49 times less risky than Yotta Acquisition. The stock trades about -0.12 of its potential returns per unit of risk. The Yotta Acquisition is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  10.00  in Yotta Acquisition on October 9, 2024 and sell it today you would lose (3.00) from holding Yotta Acquisition or give up 30.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	40.89%
Values	Daily Returns

Xp Inc  vs.  Yotta Acquisition

Xp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Yotta Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yotta Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Yotta Acquisition 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 Yotta Acquisition

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

The idea behind Xp Inc and Yotta Acquisition 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.