Correlation Between REX AI and Freedom Day

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

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

Diversification Opportunities for REX AI and Freedom Day

0.38

Correlation Coefficient

REX AI  Freedom Day

Weak diversification

The 3 months correlation between REX and Freedom is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding REX AI Equity and Freedom Day Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Freedom Day Dividend and REX AI 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 REX AI Equity are associated (or correlated) with Freedom Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Freedom Day Dividend has no effect on the direction of REX AI i.e., REX AI and Freedom Day go up and down completely randomly.

Pair Corralation between REX AI and Freedom Day

Given the investment horizon of 90 days REX AI Equity is expected to generate 1.17 times more return on investment than Freedom Day. However, REX AI is 1.17 times more volatile than Freedom Day Dividend. It trades about 0.17 of its potential returns per unit of risk. Freedom Day Dividend is currently generating about -0.03 per unit of risk. If you would invest  4,556  in REX AI Equity on September 26, 2024 and sell it today you would earn a total of  491.00  from holding REX AI Equity or generate 10.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

REX AI Equity  vs.  Freedom Day Dividend

REX AI Equity

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in REX AI Equity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, REX AI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Freedom Day Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Day Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with REX AI and Freedom Day

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

The idea behind REX AI Equity and Freedom Day Dividend 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.