Correlation Between Consensus Cloud and Rackspace Technology

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

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

Diversification Opportunities for Consensus Cloud and Rackspace Technology

0.17

Correlation Coefficient

Consensus Cloud  Rackspace Technology

Average diversification

The 3 months correlation between Consensus and Rackspace is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Consensus Cloud Solutions and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology and Consensus Cloud 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 Consensus Cloud Solutions 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 Consensus Cloud i.e., Consensus Cloud and Rackspace Technology go up and down completely randomly.

Pair Corralation between Consensus Cloud and Rackspace Technology

Given the investment horizon of 90 days Consensus Cloud Solutions is expected to generate 0.51 times more return on investment than Rackspace Technology. However, Consensus Cloud Solutions is 1.97 times less risky than Rackspace Technology. It trades about -0.25 of its potential returns per unit of risk. Rackspace Technology is currently generating about -0.27 per unit of risk. If you would invest  2,551  in Consensus Cloud Solutions on September 24, 2024 and sell it today you would lose (192.00) from holding Consensus Cloud Solutions or give up 7.53% of portfolio value over 90 days.

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

Consensus Cloud Solutions  vs.  Rackspace Technology

Consensus Cloud Solutions

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consensus Cloud Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Consensus Cloud may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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 comparatively stable basic indicators, Rackspace Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Consensus Cloud and Rackspace Technology

The main advantage of trading using opposite Consensus Cloud and Rackspace Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consensus Cloud 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 Consensus Cloud Solutions 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.