Correlation Between Maximus and Exponent

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

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

Diversification Opportunities for Maximus and Exponent

0.69

Correlation Coefficient

Maximus  Exponent

Poor diversification

The 3 months correlation between Maximus and Exponent is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and Maximus 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 Maximus are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Maximus i.e., Maximus and Exponent go up and down completely randomly.

Pair Corralation between Maximus and Exponent

Considering the 90-day investment horizon Maximus is expected to under-perform the Exponent. In addition to that, Maximus is 1.14 times more volatile than Exponent. It trades about -0.34 of its total potential returns per unit of risk. Exponent is currently generating about 0.06 per unit of volatility. If you would invest  9,621  in Exponent on August 31, 2024 and sell it today you would earn a total of  240.00  from holding Exponent or generate 2.49% return on investment over 90 days.

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

Maximus  vs.  Exponent

Maximus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maximus 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 primary indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Maximus and Exponent

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

The idea behind Maximus and Exponent 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.