Correlation Between System1 and Maximus
Can any of the company-specific risk be diversified away by investing in both System1 and Maximus 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 System1 and Maximus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between System1 and Maximus, you can compare the effects of market volatilities on System1 and Maximus 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 System1 with a short position of Maximus. Check out your portfolio center. Please also check ongoing floating volatility patterns of System1 and Maximus.
Diversification Opportunities for System1 and Maximus
Very weak diversification
The 3 months correlation between System1 and Maximus is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding System1 and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and System1 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 System1 are associated (or correlated) with Maximus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maximus has no effect on the direction of System1 i.e., System1 and Maximus go up and down completely randomly.
Pair Corralation between System1 and Maximus
Considering the 90-day investment horizon System1 is expected to under-perform the Maximus. In addition to that, System1 is 7.23 times more volatile than Maximus. It trades about -0.34 of its total potential returns per unit of risk. Maximus is currently generating about 0.47 per unit of volatility. If you would invest 7,282 in Maximus on October 23, 2024 and sell it today you would earn a total of 556.00 from holding Maximus or generate 7.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
System1 vs. Maximus
Performance |
| Timeline |
| System1 |
| Maximus |
System1 and Maximus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with System1 and Maximus
The main advantage of trading using opposite System1 and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if System1 position performs unexpectedly, Maximus 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 Maximus will offset losses from the drop in Maximus' long position.| System1 vs. Network 1 Technologies | System1 vs. Maximus | System1 vs. First Advantage Corp | System1 vs. Civeo Corp |
| Maximus vs. Network 1 Technologies | Maximus vs. First Advantage Corp | Maximus vs. BrightView Holdings | Maximus vs. Civeo Corp |
Check out your portfolio center.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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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