Correlation Between XMX and Marinade

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

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

Diversification Opportunities for XMX and Marinade

0.46

Correlation Coefficient

XMX  Marinade

Very weak diversification

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

Pair Corralation between XMX and Marinade

Assuming the 90 days trading horizon XMX is expected to generate 0.81 times more return on investment than Marinade. However, XMX is 1.24 times less risky than Marinade. It trades about 0.09 of its potential returns per unit of risk. Marinade is currently generating about -0.05 per unit of risk. If you would invest  0.00  in XMX on February 7, 2024 and sell it today you would earn a total of  0.00  from holding XMX or generate 25.0% return on investment over 90 days.

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

XMX  vs.  Marinade

XMX

Risk-Adjusted Performance

6 of 100

Modest

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

Marinade

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marinade has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's basic indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for Marinade shareholders.

Pair Trading with XMX and Marinade

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

The idea behind XMX and Marinade 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.