Correlation Between Aramark Holdings and Maximus

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

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

Diversification Opportunities for Aramark Holdings and Maximus

0.65

Correlation Coefficient

Aramark Holdings  Maximus

Poor diversification

The 3 months correlation between Aramark and Maximus is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Aramark Holdings and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and Aramark Holdings 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 Aramark Holdings are associated (or correlated) with Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of Aramark Holdings i.e., Aramark Holdings and Maximus go up and down completely randomly.

Pair Corralation between Aramark Holdings and Maximus

Given the investment horizon of 90 days Aramark Holdings is expected to under-perform the Maximus. But the stock apears to be less risky and, when comparing its historical volatility, Aramark Holdings is 1.2 times less risky than Maximus. The stock trades about -0.08 of its potential returns per unit of risk. The Maximus is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  7,390  in Maximus on December 29, 2024 and sell it today you would lose (569.00) from holding Maximus or give up 7.7% of portfolio value over 90 days.

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

Aramark Holdings  vs.  Maximus

Aramark Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aramark Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Maximus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maximus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aramark Holdings and Maximus

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

The idea behind Aramark Holdings and Maximus 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.