Correlation Between Team and Maximus

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

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

Diversification Opportunities for Team and Maximus

0.14

Correlation Coefficient

Team  Maximus

Average diversification

The 3 months correlation between Team and Maximus is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and Team 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 Team Inc are associated (or correlated) with Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of Team i.e., Team and Maximus go up and down completely randomly.

Pair Corralation between Team and Maximus

Given the investment horizon of 90 days Team Inc is expected to generate 3.92 times more return on investment than Maximus. However, Team is 3.92 times more volatile than Maximus. It trades about -0.05 of its potential returns per unit of risk. Maximus is currently generating about -0.34 per unit of risk. If you would invest  1,993  in Team Inc on August 31, 2024 and sell it today you would lose (393.00) from holding Team Inc or give up 19.72% of portfolio value over 90 days.

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

Team Inc  vs.  Maximus

Team Inc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Team Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Team demonstrated solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Team and Maximus

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

The idea behind Team Inc and Maximus 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.