Correlation Between Xtant Medical and Albemarle

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

By analyzing existing cross correlation between Xtant Medical Holdings and Albemarle, you can compare the effects of market volatilities on Xtant Medical and Albemarle 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 Xtant Medical with a short position of Albemarle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtant Medical and Albemarle.

Diversification Opportunities for Xtant Medical and Albemarle

0.07

Correlation Coefficient

Xtant Medical  Albemarle

Significant diversification

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

Pair Corralation between Xtant Medical and Albemarle

Given the investment horizon of 90 days Xtant Medical Holdings is expected to generate 2.6 times more return on investment than Albemarle. However, Xtant Medical is 2.6 times more volatile than Albemarle. It trades about 0.08 of its potential returns per unit of risk. Albemarle is currently generating about -0.05 per unit of risk. If you would invest  40.00  in Xtant Medical Holdings on December 21, 2024 and sell it today you would earn a total of  8.00  from holding Xtant Medical Holdings or generate 20.0% return on investment over 90 days.

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

Xtant Medical Holdings  vs.  Albemarle

Xtant Medical Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Xtant Medical Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Xtant Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Albemarle

Risk-Adjusted Performance

Very Weak

Over the last 90 days Albemarle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Xtant Medical and Albemarle

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

The idea behind Xtant Medical Holdings and Albemarle 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.