Correlation Between 8x8 Common and ReposiTrak

Can any of the company-specific risk be diversified away by investing in both 8x8 Common and ReposiTrak 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 8x8 Common and ReposiTrak into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 8x8 Common Stock and ReposiTrak, you can compare the effects of market volatilities on 8x8 Common and ReposiTrak 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 8x8 Common with a short position of ReposiTrak. Check out your portfolio center. Please also check ongoing floating volatility patterns of 8x8 Common and ReposiTrak.

Diversification Opportunities for 8x8 Common and ReposiTrak

0.79

Correlation Coefficient

8x8 Common  ReposiTrak

Poor diversification

The 3 months correlation between 8x8 and ReposiTrak is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding 8x8 Common Stock and ReposiTrak in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReposiTrak and 8x8 Common 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 8x8 Common Stock are associated (or correlated) with ReposiTrak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReposiTrak has no effect on the direction of 8x8 Common i.e., 8x8 Common and ReposiTrak go up and down completely randomly.

Pair Corralation between 8x8 Common and ReposiTrak

Given the investment horizon of 90 days 8x8 Common Stock is expected to generate 1.62 times more return on investment than ReposiTrak. However, 8x8 Common is 1.62 times more volatile than ReposiTrak. It trades about 0.13 of its potential returns per unit of risk. ReposiTrak is currently generating about 0.09 per unit of risk. If you would invest  198.00  in 8x8 Common Stock on October 23, 2024 and sell it today you would earn a total of  60.00  from holding 8x8 Common Stock or generate 30.3% return on investment over 90 days.

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

8x8 Common Stock  vs.  ReposiTrak

8x8 Common Stock

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 8x8 Common Stock are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical indicators, 8x8 Common unveiled solid returns over the last few months and may actually be approaching a breakup point.

ReposiTrak

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ReposiTrak are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, ReposiTrak disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with 8x8 Common and ReposiTrak

The main advantage of trading using opposite 8x8 Common and ReposiTrak positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 8x8 Common position performs unexpectedly, ReposiTrak 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 ReposiTrak will offset losses from the drop in ReposiTrak's long position.

The idea behind 8x8 Common Stock and ReposiTrak 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.