Correlation Between Xponential Fitness and GreenTree Hospitality

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

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

Diversification Opportunities for Xponential Fitness and GreenTree Hospitality

0.42

Correlation Coefficient

Xponential Fitness  GreenTree Hospitality

Very weak diversification

The 3 months correlation between Xponential and GreenTree is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and GreenTree Hospitality Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GreenTree Hospitality 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 GreenTree Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenTree Hospitality has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and GreenTree Hospitality go up and down completely randomly.

Pair Corralation between Xponential Fitness and GreenTree Hospitality

Given the investment horizon of 90 days Xponential Fitness is expected to under-perform the GreenTree Hospitality. In addition to that, Xponential Fitness is 1.32 times more volatile than GreenTree Hospitality Group. It trades about -0.33 of its total potential returns per unit of risk. GreenTree Hospitality Group is currently generating about 0.07 per unit of volatility. If you would invest  266.00  in GreenTree Hospitality Group on December 4, 2024 and sell it today you would earn a total of  10.00  from holding GreenTree Hospitality Group or generate 3.76% return on investment over 90 days.

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

Xponential Fitness  vs.  GreenTree Hospitality Group

Xponential Fitness

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xponential Fitness has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

GreenTree Hospitality

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GreenTree Hospitality Group are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable technical indicators, GreenTree Hospitality is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xponential Fitness and GreenTree Hospitality

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

The idea behind Xponential Fitness and GreenTree Hospitality 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.