Correlation Between Experian Plc and Exponent

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

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

Diversification Opportunities for Experian Plc and Exponent

0.87

Correlation Coefficient

Experian Plc  Exponent

Very poor diversification

The 3 months correlation between Experian and Exponent is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Experian plc PK and Exponent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exponent and Experian Plc 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 Experian plc PK are associated (or correlated) with Exponent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exponent has no effect on the direction of Experian Plc i.e., Experian Plc and Exponent go up and down completely randomly.

Pair Corralation between Experian Plc and Exponent

Assuming the 90 days horizon Experian plc PK is expected to generate 0.66 times more return on investment than Exponent. However, Experian plc PK is 1.51 times less risky than Exponent. It trades about -0.12 of its potential returns per unit of risk. Exponent is currently generating about -0.11 per unit of risk. If you would invest  5,059  in Experian plc PK on September 18, 2024 and sell it today you would lose (486.00) from holding Experian plc PK or give up 9.61% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.44%
Values	Daily Returns

Experian plc PK  vs.  Exponent

Experian plc PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Experian plc PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Exponent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Experian Plc and Exponent

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

The idea behind Experian plc PK and Exponent 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.