Correlation Between Xponential Fitness and Four Seasons

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

By analyzing existing cross correlation between Xponential Fitness and Four Seasons Education, you can compare the effects of market volatilities on Xponential Fitness and Four Seasons 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 Four Seasons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xponential Fitness and Four Seasons.

Diversification Opportunities for Xponential Fitness and Four Seasons

-0.52

Correlation Coefficient

Xponential Fitness  Four Seasons

Excellent diversification

The 3 months correlation between Xponential and Four is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Four Seasons Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Four Seasons Education 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 Four Seasons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Four Seasons Education has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and Four Seasons go up and down completely randomly.

Pair Corralation between Xponential Fitness and Four Seasons

Given the investment horizon of 90 days Xponential Fitness is expected to generate 29.12 times less return on investment than Four Seasons. But when comparing it to its historical volatility, Xponential Fitness is 13.64 times less risky than Four Seasons. It trades about 0.04 of its potential returns per unit of risk. Four Seasons Education is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  791.00  in Four Seasons Education on September 24, 2024 and sell it today you would earn a total of  244.00  from holding Four Seasons Education or generate 30.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	93.98%
Values	Daily Returns

Xponential Fitness  vs.  Four Seasons Education

Xponential Fitness

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Xponential Fitness are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Xponential Fitness reported solid returns over the last few months and may actually be approaching a breakup point.

Four Seasons Education

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Xponential Fitness and Four Seasons

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

The idea behind Xponential Fitness and Four Seasons Education 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.