Correlation Between Pool and XIAO I

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

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

Diversification Opportunities for Pool and XIAO I

-0.54

Correlation Coefficient

Pool  XIAO I

Excellent diversification

The 3 months correlation between Pool and XIAO is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Pool Corp. and XIAO I American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XIAO I American and Pool 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 Pool Corporation are associated (or correlated) with XIAO I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XIAO I American has no effect on the direction of Pool i.e., Pool and XIAO I go up and down completely randomly.

Pair Corralation between Pool and XIAO I

Given the investment horizon of 90 days Pool Corporation is expected to generate 0.34 times more return on investment than XIAO I. However, Pool Corporation is 2.97 times less risky than XIAO I. It trades about 0.07 of its potential returns per unit of risk. XIAO I American is currently generating about -0.22 per unit of risk. If you would invest  30,232  in Pool Corporation on May 22, 2025 and sell it today you would earn a total of  2,246  from holding Pool Corporation or generate 7.43% return on investment over 90 days.

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

Pool Corp.  vs.  XIAO I American

Pool

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in Pool Corporation are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain basic indicators, Pool may actually be approaching a critical reversion point that can send shares even higher in September 2025.

XIAO I American

Risk-Adjusted Performance

Weakest

Over the last 90 days XIAO I American has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in September 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Pool and XIAO I

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

The idea behind Pool Corporation and XIAO I American 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.