Correlation Between Graco and Xometry

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

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

Diversification Opportunities for Graco and Xometry

0.7

Correlation Coefficient

Graco  Xometry

Poor diversification

The 3 months correlation between Graco and Xometry is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Graco Inc and Xometry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xometry and Graco 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 Graco Inc are associated (or correlated) with Xometry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xometry has no effect on the direction of Graco i.e., Graco and Xometry go up and down completely randomly.

Pair Corralation between Graco and Xometry

Considering the 90-day investment horizon Graco is expected to generate 5.86 times less return on investment than Xometry. But when comparing it to its historical volatility, Graco Inc is 4.51 times less risky than Xometry. It trades about 0.1 of its potential returns per unit of risk. Xometry is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,537  in Xometry on August 30, 2024 and sell it today you would earn a total of  1,563  from holding Xometry or generate 101.69% return on investment over 90 days.

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

Graco Inc  vs.  Xometry

Graco Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Graco Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, Graco may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Xometry

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Xometry are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Xometry reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Graco and Xometry

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

The idea behind Graco Inc and Xometry 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.