Correlation Between Freedom Day and REX AI

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

By analyzing existing cross correlation between Freedom Day Dividend and REX AI Equity, you can compare the effects of market volatilities on Freedom Day and REX AI 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 Freedom Day with a short position of REX AI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Freedom Day and REX AI.

Diversification Opportunities for Freedom Day and REX AI

0.38

Correlation Coefficient

Freedom Day  REX AI

Weak diversification

The 3 months correlation between Freedom and REX is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Freedom Day Dividend and REX AI Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on REX AI Equity and Freedom Day 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 Freedom Day Dividend are associated (or correlated) with REX AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of REX AI Equity has no effect on the direction of Freedom Day i.e., Freedom Day and REX AI go up and down completely randomly.

Pair Corralation between Freedom Day and REX AI

Given the investment horizon of 90 days Freedom Day Dividend is expected to under-perform the REX AI. But the etf apears to be less risky and, when comparing its historical volatility, Freedom Day Dividend is 1.23 times less risky than REX AI. The etf trades about -0.34 of its potential returns per unit of risk. The REX AI Equity is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  5,059  in REX AI Equity on September 26, 2024 and sell it today you would lose (12.00) from holding REX AI Equity or give up 0.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Freedom Day Dividend  vs.  REX AI Equity

Freedom Day Dividend

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Freedom Day Dividend has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Freedom Day is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

REX AI Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in REX AI Equity are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, REX AI may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Freedom Day and REX AI

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

The idea behind Freedom Day Dividend and REX AI Equity 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.