Correlation Between American Business and Rackspace Technology

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

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

Diversification Opportunities for American Business and Rackspace Technology

0.0

Correlation Coefficient

American Business  Rackspace Technology

Pay attention - limited upside

The 3 months correlation between American and Rackspace is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Business Corp and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology and American Business 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 American Business Corp are associated (or correlated) with Rackspace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackspace Technology has no effect on the direction of American Business i.e., American Business and Rackspace Technology go up and down completely randomly.

Pair Corralation between American Business and Rackspace Technology

If you would invest  0.01  in American Business Corp on October 9, 2024 and sell it today you would earn a total of  0.00  from holding American Business Corp or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

American Business Corp  vs.  Rackspace Technology

American Business Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Business Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental drivers, American Business is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Rackspace Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rackspace Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with American Business and Rackspace Technology

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

The idea behind American Business Corp and Rackspace Technology 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.