Correlation Between Maximus and Aramark Holdings

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

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

Diversification Opportunities for Maximus and Aramark Holdings

0.14

Correlation Coefficient

Maximus  Aramark Holdings

Average diversification

The 3 months correlation between Maximus and Aramark is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and Aramark Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aramark Holdings 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 Aramark Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aramark Holdings has no effect on the direction of Maximus i.e., Maximus and Aramark Holdings go up and down completely randomly.

Pair Corralation between Maximus and Aramark Holdings

Considering the 90-day investment horizon Maximus is expected to under-perform the Aramark Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Maximus is 1.44 times less risky than Aramark Holdings. The stock trades about -0.13 of its potential returns per unit of risk. The Aramark Holdings is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  3,227  in Aramark Holdings on February 1, 2024 and sell it today you would lose (76.00) from holding Aramark Holdings or give up 2.36% of portfolio value over 90 days.

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

Maximus  vs.  Aramark Holdings

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 comparatively stable primary indicators, Maximus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Aramark Holdings

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aramark Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating primary indicators, Aramark Holdings may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Maximus and Aramark Holdings

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

The idea behind Maximus and Aramark Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.