Correlation Between AZZ Incorporated and Maximus

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

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

Diversification Opportunities for AZZ Incorporated and Maximus

-0.5

Correlation Coefficient

AZZ Incorporated  Maximus

Very good diversification

The 3 months correlation between AZZ and Maximus is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding AZZ Incorporated and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and AZZ Incorporated 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 AZZ Incorporated 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 AZZ Incorporated i.e., AZZ Incorporated and Maximus go up and down completely randomly.

Pair Corralation between AZZ Incorporated and Maximus

Considering the 90-day investment horizon AZZ Incorporated is expected to generate 1.07 times more return on investment than Maximus. However, AZZ Incorporated is 1.07 times more volatile than Maximus. It trades about 0.05 of its potential returns per unit of risk. Maximus is currently generating about -0.06 per unit of risk. If you would invest  8,190  in AZZ Incorporated on December 27, 2024 and sell it today you would earn a total of  395.50  from holding AZZ Incorporated or generate 4.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

AZZ Incorporated  vs.  Maximus

AZZ Incorporated

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AZZ Incorporated are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, AZZ Incorporated is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the 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 AZZ Incorporated and Maximus

The main advantage of trading using opposite AZZ Incorporated and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AZZ Incorporated 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 AZZ Incorporated 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.