Correlation Between Xcel Brands and K Bro

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

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

Diversification Opportunities for Xcel Brands and K Bro

-0.42

Correlation Coefficient

Xcel Brands  K Bro

Very good diversification

The 3 months correlation between Xcel and KBRLF is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Xcel Brands and K Bro Linen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K Bro Linen and Xcel Brands 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 Xcel Brands are associated (or correlated) with K Bro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K Bro Linen has no effect on the direction of Xcel Brands i.e., Xcel Brands and K Bro go up and down completely randomly.

Pair Corralation between Xcel Brands and K Bro

Given the investment horizon of 90 days Xcel Brands is expected to under-perform the K Bro. In addition to that, Xcel Brands is 8.48 times more volatile than K Bro Linen. It trades about -0.16 of its total potential returns per unit of risk. K Bro Linen is currently generating about -0.05 per unit of volatility. If you would invest  2,535  in K Bro Linen on May 2, 2025 and sell it today you would lose (31.00) from holding K Bro Linen or give up 1.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	62.3%
Values	Daily Returns

Xcel Brands  vs.  K Bro Linen

Xcel Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Xcel Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

K Bro Linen

Risk-Adjusted Performance

Very Weak

Over the last 90 days K Bro Linen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, K Bro is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Xcel Brands and K Bro

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

The idea behind Xcel Brands and K Bro Linen 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.