Correlation Between Urban Gro and Xos

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

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

Diversification Opportunities for Urban Gro and Xos

0.59

Correlation Coefficient

Urban Gro  Xos

Very weak diversification

The 3 months correlation between Urban and Xos is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Urban Gro and Xos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xos Inc and Urban Gro 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 Urban Gro are associated (or correlated) with Xos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xos Inc has no effect on the direction of Urban Gro i.e., Urban Gro and Xos go up and down completely randomly.

Pair Corralation between Urban Gro and Xos

Given the investment horizon of 90 days Urban Gro is expected to generate 0.95 times more return on investment than Xos. However, Urban Gro is 1.05 times less risky than Xos. It trades about 0.02 of its potential returns per unit of risk. Xos Inc is currently generating about -0.01 per unit of risk. If you would invest  195.00  in Urban Gro on March 15, 2024 and sell it today you would lose (58.00) from holding Urban Gro or give up 29.74% of portfolio value over 90 days.

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

Urban Gro  vs.  Xos Inc

Urban Gro

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Urban Gro has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Xos Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in July 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Urban Gro and Xos

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

The idea behind Urban Gro and Xos Inc 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 Commodity Directory module to find actively traded commodities issued by global exchanges.