Correlation Between Malibu Boats and ExlService Holdings

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

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

Diversification Opportunities for Malibu Boats and ExlService Holdings

0.39

Correlation Coefficient

Malibu Boats  ExlService Holdings

Weak diversification

The 3 months correlation between Malibu and ExlService is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Malibu Boats and ExlService Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ExlService Holdings and Malibu Boats 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 Malibu Boats are associated (or correlated) with ExlService Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ExlService Holdings has no effect on the direction of Malibu Boats i.e., Malibu Boats and ExlService Holdings go up and down completely randomly.

Pair Corralation between Malibu Boats and ExlService Holdings

Given the investment horizon of 90 days Malibu Boats is expected to under-perform the ExlService Holdings. In addition to that, Malibu Boats is 1.67 times more volatile than ExlService Holdings. It trades about -0.13 of its total potential returns per unit of risk. ExlService Holdings is currently generating about 0.07 per unit of volatility. If you would invest  4,426  in ExlService Holdings on December 30, 2024 and sell it today you would earn a total of  254.00  from holding ExlService Holdings or generate 5.74% return on investment over 90 days.

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

Malibu Boats  vs.  ExlService Holdings

Malibu Boats

Risk-Adjusted Performance

Very Weak

Over the last 90 days Malibu Boats has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

ExlService Holdings

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ExlService Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile essential indicators, ExlService Holdings may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Malibu Boats and ExlService Holdings

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

The idea behind Malibu Boats and ExlService Holdings 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.