Correlation Between Xos Equity and Autoliv

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

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

Diversification Opportunities for Xos Equity and Autoliv

0.08

Correlation Coefficient

Xos Equity  Autoliv

Significant diversification

The 3 months correlation between Xos and Autoliv is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Xos Equity Warrants and Autoliv in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autoliv and Xos Equity 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 Xos Equity Warrants are associated (or correlated) with Autoliv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autoliv has no effect on the direction of Xos Equity i.e., Xos Equity and Autoliv go up and down completely randomly.

Pair Corralation between Xos Equity and Autoliv

Assuming the 90 days horizon Xos Equity Warrants is expected to generate 14.76 times more return on investment than Autoliv. However, Xos Equity is 14.76 times more volatile than Autoliv. It trades about 0.15 of its potential returns per unit of risk. Autoliv is currently generating about 0.28 per unit of risk. If you would invest  2.97  in Xos Equity Warrants on February 29, 2024 and sell it today you would earn a total of  0.93  from holding Xos Equity Warrants or generate 31.31% return on investment over 90 days.

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

Xos Equity Warrants  vs.  Autoliv

Xos Equity Warrants

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xos Equity Warrants are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Xos Equity showed solid returns over the last few months and may actually be approaching a breakup point.

Autoliv

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Autoliv are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Autoliv may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Xos Equity and Autoliv

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

The idea behind Xos Equity Warrants and Autoliv 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.

Check out your portfolio center.

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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.