Correlation Between X Financial and Invesco SP

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

By analyzing existing cross correlation between X Financial Class and Invesco SP 500, you can compare the effects of market volatilities on X Financial and Invesco SP 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 X Financial with a short position of Invesco SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of X Financial and Invesco SP.

Diversification Opportunities for X Financial and Invesco SP

-0.39

Correlation Coefficient

X Financial  Invesco SP

Very good diversification

The 3 months correlation between XYF and Invesco is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding X Financial Class and Invesco SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco SP 500 and X Financial 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 X Financial Class are associated (or correlated) with Invesco SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco SP 500 has no effect on the direction of X Financial i.e., X Financial and Invesco SP go up and down completely randomly.

Pair Corralation between X Financial and Invesco SP

Considering the 90-day investment horizon X Financial Class is expected to generate 5.24 times more return on investment than Invesco SP. However, X Financial is 5.24 times more volatile than Invesco SP 500. It trades about 0.19 of its potential returns per unit of risk. Invesco SP 500 is currently generating about -0.37 per unit of risk. If you would invest  730.00  in X Financial Class on October 6, 2024 and sell it today you would earn a total of  118.00  from holding X Financial Class or generate 16.16% return on investment over 90 days.

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

X Financial Class  vs.  Invesco SP 500

X Financial Class

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in X Financial Class are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, X Financial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Invesco SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Invesco SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Invesco SP is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with X Financial and Invesco SP

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

The idea behind X Financial Class and Invesco SP 500 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.