Correlation Between Tyler Technologies and Exela Technologies

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

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

Diversification Opportunities for Tyler Technologies and Exela Technologies

-0.12

Correlation Coefficient

Tyler Technologies  Exela Technologies

Good diversification

The 3 months correlation between Tyler and Exela is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Tyler Technologies and Exela Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exela Technologies and Tyler Technologies 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 Tyler Technologies are associated (or correlated) with Exela Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exela Technologies has no effect on the direction of Tyler Technologies i.e., Tyler Technologies and Exela Technologies go up and down completely randomly.

Pair Corralation between Tyler Technologies and Exela Technologies

Considering the 90-day investment horizon Tyler Technologies is expected to generate 0.2 times more return on investment than Exela Technologies. However, Tyler Technologies is 5.05 times less risky than Exela Technologies. It trades about 0.01 of its potential returns per unit of risk. Exela Technologies is currently generating about -0.31 per unit of risk. If you would invest  41,809  in Tyler Technologies on January 26, 2024 and sell it today you would earn a total of  91.00  from holding Tyler Technologies or generate 0.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Tyler Technologies  vs.  Exela Technologies

Tyler Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tyler Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tyler Technologies is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Exela Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exela Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Exela Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tyler Technologies and Exela Technologies

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

The idea behind Tyler Technologies and Exela Technologies 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.