Correlation Between Xai and NANO

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

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

Diversification Opportunities for Xai and NANO

0.6

Correlation Coefficient

Xai  NANO

Poor diversification

The 3 months correlation between Xai and NANO is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Xai and NANO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NANO and Xai 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 Xai are associated (or correlated) with NANO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NANO has no effect on the direction of Xai i.e., Xai and NANO go up and down completely randomly.

Pair Corralation between Xai and NANO

Assuming the 90 days trading horizon Xai is expected to generate 1.71 times more return on investment than NANO. However, Xai is 1.71 times more volatile than NANO. It trades about 0.0 of its potential returns per unit of risk. NANO is currently generating about -0.02 per unit of risk. If you would invest  25.00  in Xai on August 23, 2024 and sell it today you would lose (3.00) from holding Xai or give up 12.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Xai  vs.  NANO

Xai

Risk-Adjusted Performance

0 of 100

Weak

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

NANO

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Xai and NANO

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

The idea behind Xai and NANO 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.