Correlation Between LEO Token and XPLA

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

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

Diversification Opportunities for LEO Token and XPLA

-0.41

Correlation Coefficient

LEO Token  XPLA

Very good diversification

The 3 months correlation between LEO and XPLA is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding LEO Token and XPLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XPLA and LEO Token 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 LEO Token are associated (or correlated) with XPLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XPLA has no effect on the direction of LEO Token i.e., LEO Token and XPLA go up and down completely randomly.

Pair Corralation between LEO Token and XPLA

Assuming the 90 days trading horizon LEO Token is expected to generate 0.4 times more return on investment than XPLA. However, LEO Token is 2.53 times less risky than XPLA. It trades about 0.07 of its potential returns per unit of risk. XPLA is currently generating about -0.04 per unit of risk. If you would invest  573.00  in LEO Token on August 4, 2024 and sell it today you would earn a total of  34.00  from holding LEO Token or generate 5.93% return on investment over 90 days.

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

LEO Token  vs.  XPLA

LEO Token

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in LEO Token are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, LEO Token is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

XPLA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XPLA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Crypto's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for XPLA shareholders.

Pair Trading with LEO Token and XPLA

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

The idea behind LEO Token and XPLA 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.