Correlation Between XAS and Illuvium

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

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

Diversification Opportunities for XAS and Illuvium

-0.17

Correlation Coefficient

XAS  Illuvium

Good diversification

The 3 months correlation between XAS and Illuvium is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding XAS and Illuvium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Illuvium and XAS 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 XAS are associated (or correlated) with Illuvium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Illuvium has no effect on the direction of XAS i.e., XAS and Illuvium go up and down completely randomly.

Pair Corralation between XAS and Illuvium

If you would invest  5.25  in XAS on January 29, 2024 and sell it today you would earn a total of  0.00  from holding XAS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

XAS  vs.  Illuvium

XAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XAS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, XAS is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Illuvium

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with XAS and Illuvium

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

The idea behind XAS and Illuvium 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.

Check out your portfolio center.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.