Correlation Between Exponent and CBIZ

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

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

Diversification Opportunities for Exponent and CBIZ

-0.74

Correlation Coefficient

Exponent  CBIZ

Pay attention - limited upside

The 3 months correlation between Exponent and CBIZ is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and CBIZ Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBIZ Inc and Exponent 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 Exponent are associated (or correlated) with CBIZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBIZ Inc has no effect on the direction of Exponent i.e., Exponent and CBIZ go up and down completely randomly.

Pair Corralation between Exponent and CBIZ

Given the investment horizon of 90 days Exponent is expected to under-perform the CBIZ. In addition to that, Exponent is 1.08 times more volatile than CBIZ Inc. It trades about -0.1 of its total potential returns per unit of risk. CBIZ Inc is currently generating about 0.15 per unit of volatility. If you would invest  6,796  in CBIZ Inc on September 15, 2024 and sell it today you would earn a total of  1,164  from holding CBIZ Inc or generate 17.13% return on investment over 90 days.

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

Exponent  vs.  CBIZ Inc

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 weak 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.

CBIZ Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CBIZ Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, CBIZ showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exponent and CBIZ

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

The idea behind Exponent and CBIZ Inc 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.