Correlation Between BASE and Expensify

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

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

Diversification Opportunities for BASE and Expensify

0.26

Correlation Coefficient

BASE  Expensify

Modest diversification

The 3 months correlation between BASE and Expensify is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and Expensify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expensify and BASE 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 BASE Inc are associated (or correlated) with Expensify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expensify has no effect on the direction of BASE i.e., BASE and Expensify go up and down completely randomly.

Pair Corralation between BASE and Expensify

Assuming the 90 days horizon BASE is expected to generate 7.29 times less return on investment than Expensify. But when comparing it to its historical volatility, BASE Inc is 1.18 times less risky than Expensify. It trades about 0.02 of its potential returns per unit of risk. Expensify is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  161.00  in Expensify on September 24, 2024 and sell it today you would earn a total of  199.00  from holding Expensify or generate 123.6% return on investment over 90 days.

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

BASE Inc  vs.  Expensify

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

Expensify

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Expensify are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical and fundamental indicators, Expensify showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BASE and Expensify

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

The idea behind BASE Inc and Expensify 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.