Correlation Between Stellar and XMR

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

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

Diversification Opportunities for Stellar and XMR

0.3

Correlation Coefficient

Stellar  XMR

Weak diversification

The 3 months correlation between Stellar and XMR is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and XMR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XMR and Stellar 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 Stellar are associated (or correlated) with XMR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XMR has no effect on the direction of Stellar i.e., Stellar and XMR go up and down completely randomly.

Pair Corralation between Stellar and XMR

Assuming the 90 days trading horizon Stellar is expected to generate 6.17 times less return on investment than XMR. But when comparing it to its historical volatility, Stellar is 1.34 times less risky than XMR. It trades about 0.02 of its potential returns per unit of risk. XMR is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14,765  in XMR on August 11, 2024 and sell it today you would earn a total of  1,598  from holding XMR or generate 10.82% return on investment over 90 days.

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

Stellar  vs.  XMR

Stellar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, Stellar is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

XMR

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in XMR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, XMR may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Stellar and XMR

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

The idea behind Stellar and XMR 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.