Correlation Between Wex and Maj Invest

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

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

Diversification Opportunities for Wex and Maj Invest

0.91

Correlation Coefficient

Wex  Maj Invest

Almost no diversification

The 3 months correlation between Wex and Maj is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Wex Inc and Maj Invest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maj Invest and Wex 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 Wex Inc are associated (or correlated) with Maj Invest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maj Invest has no effect on the direction of Wex i.e., Wex and Maj Invest go up and down completely randomly.

Pair Corralation between Wex and Maj Invest

Considering the 90-day investment horizon Wex Inc is expected to under-perform the Maj Invest. In addition to that, Wex is 2.42 times more volatile than Maj Invest . It trades about -0.06 of its total potential returns per unit of risk. Maj Invest is currently generating about -0.06 per unit of volatility. If you would invest  20,346  in Maj Invest on January 26, 2024 and sell it today you would lose (92.00) from holding Maj Invest or give up 0.45% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	90.48%
Values	Daily Returns

Wex Inc  vs.  Maj Invest

Wex Inc

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wex Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Wex may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Maj Invest

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Maj Invest are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Maj Invest is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Wex and Maj Invest

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

The idea behind Wex Inc and Maj Invest 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.