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 Preferred 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

-0.38

Correlation Coefficient

Exela Technologies  Technology Munications

Very good diversification

The 3 months correlation between Exela and Technology is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Exela Technologies Preferred 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 Preferred 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

Assuming the 90 days horizon Exela Technologies Preferred is expected to under-perform the Technology Munications. In addition to that, Exela Technologies is 3.9 times more volatile than Technology Munications Portfolio. It trades about -0.21 of its total potential returns per unit of risk. Technology Munications Portfolio is currently generating about 0.0 per unit of volatility. If you would invest  2,701  in Technology Munications Portfolio on September 12, 2024 and sell it today you would lose (9.00) from holding Technology Munications Portfolio or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Exela Technologies Preferred  vs.  Technology Munications Portfol

Exela Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exela Technologies Preferred has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Preferred Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Technology Munications

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Technology Munications Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Technology Munications is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 Preferred 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.