Correlation Between Rapid7 and Corpay

Can any of the company-specific risk be diversified away by investing in both Rapid7 and Corpay 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 Rapid7 and Corpay into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Rapid7 Inc and Corpay Inc, you can compare the effects of market volatilities on Rapid7 and Corpay 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 Rapid7 with a short position of Corpay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rapid7 and Corpay.

Diversification Opportunities for Rapid7 and Corpay

0.78

Correlation Coefficient

Rapid7  Corpay

Poor diversification

The 3 months correlation between Rapid7 and Corpay is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Rapid7 Inc and Corpay Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corpay Inc and Rapid7 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 Rapid7 Inc are associated (or correlated) with Corpay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corpay Inc has no effect on the direction of Rapid7 i.e., Rapid7 and Corpay go up and down completely randomly.

Pair Corralation between Rapid7 and Corpay

Considering the 90-day investment horizon Rapid7 Inc is expected to generate 1.14 times more return on investment than Corpay. However, Rapid7 is 1.14 times more volatile than Corpay Inc. It trades about 0.03 of its potential returns per unit of risk. Corpay Inc is currently generating about -0.01 per unit of risk. If you would invest  3,867  in Rapid7 Inc on September 22, 2024 and sell it today you would earn a total of  69.00  from holding Rapid7 Inc or generate 1.78% return on investment over 90 days.

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

Rapid7 Inc  vs.  Corpay Inc

Rapid7 Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid7 Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Rapid7 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Corpay Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corpay Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Corpay may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Rapid7 and Corpay

The main advantage of trading using opposite Rapid7 and Corpay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rapid7 position performs unexpectedly, Corpay 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 Corpay will offset losses from the drop in Corpay's long position.

The idea behind Rapid7 Inc and Corpay Inc 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.