Correlation Between ExlService Holdings and Malibu Boats

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

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

Diversification Opportunities for ExlService Holdings and Malibu Boats

0.78

Correlation Coefficient

ExlService Holdings  Malibu Boats

Poor diversification

The 3 months correlation between ExlService and Malibu is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ExlService Holdings and Malibu Boats in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Malibu Boats and ExlService Holdings 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 ExlService Holdings are associated (or correlated) with Malibu Boats. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Malibu Boats has no effect on the direction of ExlService Holdings i.e., ExlService Holdings and Malibu Boats go up and down completely randomly.

Pair Corralation between ExlService Holdings and Malibu Boats

Given the investment horizon of 90 days ExlService Holdings is expected to generate 0.58 times more return on investment than Malibu Boats. However, ExlService Holdings is 1.71 times less risky than Malibu Boats. It trades about 0.27 of its potential returns per unit of risk. Malibu Boats is currently generating about 0.13 per unit of risk. If you would invest  3,654  in ExlService Holdings on August 30, 2024 and sell it today you would earn a total of  1,005  from holding ExlService Holdings or generate 27.5% return on investment over 90 days.

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

ExlService Holdings  vs.  Malibu Boats

ExlService Holdings

Risk-Adjusted Performance

21 of 100

Solid

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

Malibu Boats

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Malibu Boats are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Malibu Boats unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ExlService Holdings and Malibu Boats

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

The idea behind ExlService Holdings and Malibu Boats 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.