Correlation Between Maximus and System1

Can any of the company-specific risk be diversified away by investing in both Maximus and System1 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 Maximus and System1 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Maximus and System1, you can compare the effects of market volatilities on Maximus and System1 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 Maximus with a short position of System1. Check out your portfolio center. Please also check ongoing floating volatility patterns of Maximus and System1.

Diversification Opportunities for Maximus and System1

0.66

Correlation Coefficient

Maximus  System1

Poor diversification

The 3 months correlation between Maximus and System1 is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and System1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on System1 and Maximus 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 Maximus are associated (or correlated) with System1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of System1 has no effect on the direction of Maximus i.e., Maximus and System1 go up and down completely randomly.

Pair Corralation between Maximus and System1

Considering the 90-day investment horizon Maximus is expected to generate 0.47 times more return on investment than System1. However, Maximus is 2.12 times less risky than System1. It trades about -0.19 of its potential returns per unit of risk. System1 is currently generating about -0.13 per unit of risk. If you would invest  8,837  in Maximus on September 13, 2024 and sell it today you would lose (1,731) from holding Maximus or give up 19.59% of portfolio value over 90 days.

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

Maximus  vs.  System1

Maximus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maximus 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 primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

System1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days System1 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 Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Maximus and System1

The main advantage of trading using opposite Maximus and System1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Maximus position performs unexpectedly, System1 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 System1 will offset losses from the drop in System1's long position.

The idea behind Maximus and System1 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 Commodity Directory module to find actively traded commodities issued by global exchanges.