Correlation Between Maximus and LegalZoom

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

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

Diversification Opportunities for Maximus and LegalZoom

-0.6

Correlation Coefficient

Maximus  LegalZoom

Excellent diversification

The 3 months correlation between Maximus and LegalZoom is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and LegalZoom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LegalZoom 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 LegalZoom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LegalZoom has no effect on the direction of Maximus i.e., Maximus and LegalZoom go up and down completely randomly.

Pair Corralation between Maximus and LegalZoom

Considering the 90-day investment horizon Maximus is expected to generate 0.58 times more return on investment than LegalZoom. However, Maximus is 1.73 times less risky than LegalZoom. It trades about 0.01 of its potential returns per unit of risk. LegalZoom is currently generating about -0.1 per unit of risk. If you would invest  7,458  in Maximus on October 4, 2024 and sell it today you would earn a total of  7.00  from holding Maximus or generate 0.09% return on investment over 90 days.

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

Maximus  vs.  LegalZoom

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 February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

LegalZoom

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LegalZoom are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, LegalZoom showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Maximus and LegalZoom

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

The idea behind Maximus and LegalZoom 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..