Correlation Between Maximus and Target Hospitality

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

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

Diversification Opportunities for Maximus and Target Hospitality

-0.04

Correlation Coefficient

Maximus  Target Hospitality

Good diversification

The 3 months correlation between Maximus and Target is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and Target Hospitality Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target Hospitality Corp 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 Target Hospitality. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target Hospitality Corp has no effect on the direction of Maximus i.e., Maximus and Target Hospitality go up and down completely randomly.

Pair Corralation between Maximus and Target Hospitality

Considering the 90-day investment horizon Maximus is expected to under-perform the Target Hospitality. But the stock apears to be less risky and, when comparing its historical volatility, Maximus is 2.02 times less risky than Target Hospitality. The stock trades about -0.19 of its potential returns per unit of risk. The Target Hospitality Corp is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  959.00  in Target Hospitality Corp on August 31, 2024 and sell it today you would lose (129.00) from holding Target Hospitality Corp or give up 13.45% of portfolio value over 90 days.

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

Maximus  vs.  Target Hospitality Corp

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.

Target Hospitality Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Target Hospitality Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's technical indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Maximus and Target Hospitality

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

The idea behind Maximus and Target Hospitality Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..