Correlation Between ExlService Holdings and Exponent
Can any of the company-specific risk be diversified away by investing in both ExlService Holdings and Exponent 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 ExlService Holdings and Exponent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ExlService Holdings and Exponent, you can compare the effects of market volatilities on ExlService Holdings and Exponent 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 ExlService Holdings with a short position of Exponent. Check out your portfolio center. Please also check ongoing floating volatility patterns of ExlService Holdings and Exponent.
Diversification Opportunities for ExlService Holdings and Exponent
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ExlService and Exponent is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and ExlService Holdings 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 ExlService Holdings are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Exponent go up and down completely randomly.
Pair Corralation between ExlService Holdings and Exponent
Given the investment horizon of 90 days ExlService Holdings is expected to under-perform the Exponent. In addition to that, ExlService Holdings is 1.35 times more volatile than Exponent. It trades about -0.04 of its total potential returns per unit of risk. Exponent is currently generating about -0.01 per unit of volatility. If you would invest 7,885 in Exponent on January 17, 2024 and sell it today you would lose (38.00) from holding Exponent or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ExlService Holdings vs. Exponent
Performance |
| Timeline |
| ExlService Holdings |
| Exponent |
ExlService Holdings and Exponent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ExlService Holdings and Exponent
The main advantage of trading using opposite ExlService Holdings and Exponent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ExlService Holdings position performs unexpectedly, Exponent 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 Exponent will offset losses from the drop in Exponent's long position.| ExlService Holdings vs. Formula Systems 1985 | ExlService Holdings vs. CSP Inc | ExlService Holdings vs. Nayax | ExlService Holdings vs. The Hackett Group |
| Exponent vs. Maximus | Exponent vs. First Advantage Corp | Exponent vs. Network 1 Technologies | Exponent vs. RB Global |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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