Correlation Between EVgo Equity and Xos Equity

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

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

Diversification Opportunities for EVgo Equity and Xos Equity

-0.28

Correlation Coefficient

EVgo Equity  Xos Equity

Very good diversification

The 3 months correlation between EVgo and Xos is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding EVgo Equity Warrants and Xos Equity Warrants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Equity Warrants and EVgo Equity 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 EVgo Equity Warrants are associated (or correlated) with Xos Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Equity Warrants has no effect on the direction of EVgo Equity i.e., EVgo Equity and Xos Equity go up and down completely randomly.

Pair Corralation between EVgo Equity and Xos Equity

Assuming the 90 days horizon EVgo Equity is expected to generate 6.08 times less return on investment than Xos Equity. But when comparing it to its historical volatility, EVgo Equity Warrants is 6.81 times less risky than Xos Equity. It trades about 0.11 of its potential returns per unit of risk. Xos Equity Warrants is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  2.45  in Xos Equity Warrants on August 27, 2024 and sell it today you would lose (1.62) from holding Xos Equity Warrants or give up 66.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.49%
Values	Daily Returns

EVgo Equity Warrants  vs.  Xos Equity Warrants

EVgo Equity Warrants

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in EVgo Equity Warrants are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, EVgo Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Xos Equity Warrants

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Equity Warrants are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Xos Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with EVgo Equity and Xos Equity

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

The idea behind EVgo Equity Warrants and Xos Equity Warrants 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.