Correlation Between Xponential Fitness and American Virtual

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

By analyzing existing cross correlation between Xponential Fitness and American Virtual Cloud, you can compare the effects of market volatilities on Xponential Fitness and American Virtual 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 Xponential Fitness with a short position of American Virtual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and American Virtual.

Diversification Opportunities for Xponential Fitness and American Virtual

-0.28

Correlation Coefficient

Xponential Fitness  American Virtual

Very good diversification

The 3 months correlation between Xponential and American is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and American Virtual Cloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Virtual Cloud and Xponential Fitness 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 Xponential Fitness are associated (or correlated) with American Virtual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Virtual Cloud has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and American Virtual go up and down completely randomly.

Pair Corralation between Xponential Fitness and American Virtual

Given the investment horizon of 90 days Xponential Fitness is expected to generate 295.71 times less return on investment than American Virtual. But when comparing it to its historical volatility, Xponential Fitness is 15.53 times less risky than American Virtual. It trades about 0.01 of its potential returns per unit of risk. American Virtual Cloud is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  7.10  in American Virtual Cloud on September 14, 2024 and sell it today you would lose (6.50) from holding American Virtual Cloud or give up 91.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	21.26%
Values	Daily Returns

Xponential Fitness  vs.  American Virtual Cloud

Xponential Fitness

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Xponential Fitness may actually be approaching a critical reversion point that can send shares even higher in January 2025.

American Virtual Cloud

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Virtual Cloud has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, American Virtual is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Xponential Fitness and American Virtual

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

The idea behind Xponential Fitness and American Virtual Cloud 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.