Correlation Between Financial and Exemplar Growth

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

By analyzing existing cross correlation between Financial 15 Split and Exemplar Growth and, you can compare the effects of market volatilities on Financial and Exemplar Growth 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 Financial with a short position of Exemplar Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financial and Exemplar Growth.

Diversification Opportunities for Financial and Exemplar Growth

0.79

Correlation Coefficient

Financial  Exemplar Growth

Poor diversification

The 3 months correlation between Financial and Exemplar is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Financial 15 Split and Exemplar Growth and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exemplar Growth and Financial 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 Financial 15 Split are associated (or correlated) with Exemplar Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exemplar Growth has no effect on the direction of Financial i.e., Financial and Exemplar Growth go up and down completely randomly.

Pair Corralation between Financial and Exemplar Growth

Assuming the 90 days trading horizon Financial 15 Split is expected to under-perform the Exemplar Growth. In addition to that, Financial is 4.42 times more volatile than Exemplar Growth and. It trades about -0.21 of its total potential returns per unit of risk. Exemplar Growth and is currently generating about 0.05 per unit of volatility. If you would invest  2,254  in Exemplar Growth and on September 23, 2024 and sell it today you would earn a total of  9.00  from holding Exemplar Growth and or generate 0.4% return on investment over 90 days.

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

Financial 15 Split  vs.  Exemplar Growth and

Financial 15 Split

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Financial 15 Split are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Financial may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Exemplar Growth

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Exemplar Growth and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Exemplar Growth is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Financial and Exemplar Growth

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

The idea behind Financial 15 Split and Exemplar Growth and 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.