Correlation Between Rogers and Maximus

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

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

Diversification Opportunities for Rogers and Maximus

0.02

Correlation Coefficient

Rogers  Maximus

Significant diversification

The 3 months correlation between Rogers and Maximus is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Rogers and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and Rogers 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 Rogers 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 Rogers i.e., Rogers and Maximus go up and down completely randomly.

Pair Corralation between Rogers and Maximus

Considering the 90-day investment horizon Rogers is expected to generate 3.44 times more return on investment than Maximus. However, Rogers is 3.44 times more volatile than Maximus. It trades about 0.03 of its potential returns per unit of risk. Maximus is currently generating about -0.13 per unit of risk. If you would invest  11,816  in Rogers on February 1, 2024 and sell it today you would earn a total of  93.00  from holding Rogers or generate 0.79% return on investment over 90 days.

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

Rogers  vs.  Maximus

Rogers

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rogers are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Rogers is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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 comparatively stable primary indicators, Maximus 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 Rogers and Maximus

The main advantage of trading using opposite Rogers and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rogers 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 Rogers 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.