Correlation Between Xtant Medical and Worthington Steel

Can any of the company-specific risk be diversified away by investing in both Xtant Medical and Worthington Steel 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 Worthington Steel 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 Worthington Steel, you can compare the effects of market volatilities on Xtant Medical and Worthington Steel 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 Worthington Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtant Medical and Worthington Steel.

Diversification Opportunities for Xtant Medical and Worthington Steel

-0.46

Correlation Coefficient

Xtant Medical  Worthington Steel

Very good diversification

The 3 months correlation between Xtant and Worthington is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Xtant Medical Holdings and Worthington Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Worthington Steel 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 Worthington Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Worthington Steel has no effect on the direction of Xtant Medical i.e., Xtant Medical and Worthington Steel go up and down completely randomly.

Pair Corralation between Xtant Medical and Worthington Steel

Given the investment horizon of 90 days Xtant Medical Holdings is expected to generate 2.66 times more return on investment than Worthington Steel. However, Xtant Medical is 2.66 times more volatile than Worthington Steel. It trades about 0.41 of its potential returns per unit of risk. Worthington Steel is currently generating about -0.1 per unit of risk. If you would invest  40.00  in Xtant Medical Holdings on October 24, 2024 and sell it today you would earn a total of  19.00  from holding Xtant Medical Holdings or generate 47.5% return on investment over 90 days.

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

Xtant Medical Holdings  vs.  Worthington Steel

Xtant Medical Holdings

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Xtant Medical Holdings are ranked lower than 4 (%) 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.

Worthington Steel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Worthington Steel has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic 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 Xtant Medical and Worthington Steel

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

The idea behind Xtant Medical Holdings and Worthington Steel 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.