Correlation Between General Employment and XWC

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Can any of the company-specific risk be diversified away by investing in both General Employment and XWC 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 General Employment and XWC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Employment Enterprises and XWC, you can compare the effects of market volatilities on General Employment and XWC 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 General Employment with a short position of XWC. Check out your portfolio center. Please also check ongoing floating volatility patterns of General Employment and XWC.

Diversification Opportunities for General Employment and XWC

-0.59
  Correlation Coefficient

Excellent diversification

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

Pair Corralation between General Employment and XWC

Considering the 90-day investment horizon General Employment Enterprises is expected to generate 0.13 times more return on investment than XWC. However, General Employment Enterprises is 7.66 times less risky than XWC. It trades about 0.37 of its potential returns per unit of risk. XWC is currently generating about -0.13 per unit of risk. If you would invest  63.00  in General Employment Enterprises on August 31, 2022 and sell it today you would earn a total of  12.00  from holding General Employment Enterprises or generate 19.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy95.45%
ValuesDaily Returns

General Employment Enterprises  vs.  XWC

 Performance (%) 
       Timeline  
General Employment 
General Performance
2 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in General Employment Enterprises are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, General Employment may actually be approaching a critical reversion point that can send shares even higher in December 2022.

General Price Channel

XWC 
XWC Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in XWC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, XWC sustained solid returns over the last few months and may actually be approaching a breakup point.

XWC Price Channel

General Employment and XWC Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with General Employment and XWC

The main advantage of trading using opposite General Employment and XWC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if General Employment position performs unexpectedly, XWC 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 XWC will offset losses from the drop in XWC's long position.
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The idea behind General Employment Enterprises and XWC 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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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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