Correlation Between Xponential Fitness and Vestis

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

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

Diversification Opportunities for Xponential Fitness and Vestis

0.69

Correlation Coefficient

Xponential Fitness  Vestis

Poor diversification

The 3 months correlation between Xponential and Vestis is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Xponential Fitness and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Xponential Fitness i.e., Xponential Fitness and Vestis go up and down completely randomly.

Pair Corralation between Xponential Fitness and Vestis

Given the investment horizon of 90 days Xponential Fitness is expected to generate 2.97 times more return on investment than Vestis. However, Xponential Fitness is 2.97 times more volatile than Vestis. It trades about -0.08 of its potential returns per unit of risk. Vestis is currently generating about -0.27 per unit of risk. If you would invest  1,309  in Xponential Fitness on December 30, 2024 and sell it today you would lose (538.00) from holding Xponential Fitness or give up 41.1% of portfolio value over 90 days.

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

Xponential Fitness  vs.  Vestis

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 uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Vestis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vestis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Xponential Fitness and Vestis

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

The idea behind Xponential Fitness and Vestis 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.