Correlation Between Rackspace Technology and Mosaic

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

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

Diversification Opportunities for Rackspace Technology and Mosaic

-0.04

Correlation Coefficient

Rackspace Technology  Mosaic

Good diversification

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

Pair Corralation between Rackspace Technology and Mosaic

Considering the 90-day investment horizon Rackspace Technology is expected to generate 1.79 times more return on investment than Mosaic. However, Rackspace Technology is 1.79 times more volatile than The Mosaic. It trades about 0.09 of its potential returns per unit of risk. The Mosaic is currently generating about -0.01 per unit of risk. If you would invest  221.00  in Rackspace Technology on September 3, 2024 and sell it today you would earn a total of  47.00  from holding Rackspace Technology or generate 21.27% return on investment over 90 days.

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

Rackspace Technology  vs.  The Mosaic

Rackspace Technology

Risk-Adjusted Performance

7 of 100

OK

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

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Rackspace Technology and Mosaic

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

The idea behind Rackspace Technology and The Mosaic 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.