Correlation Between Bill and Rackspace Technology

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

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

Diversification Opportunities for Bill and Rackspace Technology

0.25

Correlation Coefficient

Bill  Rackspace Technology

Modest diversification

The 3 months correlation between Bill and Rackspace is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Bill Com Holdings and Rackspace Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rackspace Technology and Bill 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 Bill Com Holdings are associated (or correlated) with Rackspace Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rackspace Technology has no effect on the direction of Bill i.e., Bill and Rackspace Technology go up and down completely randomly.

Pair Corralation between Bill and Rackspace Technology

Given the investment horizon of 90 days Bill Com Holdings is expected to generate 0.7 times more return on investment than Rackspace Technology. However, Bill Com Holdings is 1.43 times less risky than Rackspace Technology. It trades about 0.16 of its potential returns per unit of risk. Rackspace Technology is currently generating about 0.02 per unit of risk. If you would invest  4,863  in Bill Com Holdings on September 14, 2024 and sell it today you would earn a total of  3,986  from holding Bill Com Holdings or generate 81.96% return on investment over 90 days.

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

Bill Com Holdings  vs.  Rackspace Technology

Bill Com Holdings

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bill Com Holdings are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, Bill disclosed solid returns over the last few months and may actually be approaching a breakup point.

Rackspace Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rackspace Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Rackspace Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bill and Rackspace Technology

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

The idea behind Bill Com Holdings and Rackspace Technology 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.