Correlation Between Exela Technologies and Technology Munications

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

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

Diversification Opportunities for Exela Technologies and Technology Munications

-0.5

Correlation Coefficient

Exela Technologies  Technology Munications

Very good diversification

The 3 months correlation between Exela and Technology is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Exela Technologies and Technology Munications Portfol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technology Munications and Exela Technologies 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 Exela Technologies are associated (or correlated) with Technology Munications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technology Munications has no effect on the direction of Exela Technologies i.e., Exela Technologies and Technology Munications go up and down completely randomly.

Pair Corralation between Exela Technologies and Technology Munications

Given the investment horizon of 90 days Exela Technologies is expected to under-perform the Technology Munications. In addition to that, Exela Technologies is 7.04 times more volatile than Technology Munications Portfolio. It trades about -0.04 of its total potential returns per unit of risk. Technology Munications Portfolio is currently generating about 0.09 per unit of volatility. If you would invest  1,847  in Technology Munications Portfolio on September 4, 2024 and sell it today you would earn a total of  1,108  from holding Technology Munications Portfolio or generate 59.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	97.37%
Values	Daily Returns

Exela Technologies  vs.  Technology Munications Portfol

Exela Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exela Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Technology Munications

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Technology Munications Portfolio are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Technology Munications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Exela Technologies and Technology Munications

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

The idea behind Exela Technologies and Technology Munications Portfolio 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.