Correlation Between Exela Technologies and Lowes Companies

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

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

Diversification Opportunities for Exela Technologies and Lowes Companies

0.42

Correlation Coefficient

Exela Technologies  Lowes Companies

Very weak diversification

The 3 months correlation between Exela and Lowes is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Exela Technologies and Lowes Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lowes Companies 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 Lowes Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lowes Companies has no effect on the direction of Exela Technologies i.e., Exela Technologies and Lowes Companies go up and down completely randomly.

Pair Corralation between Exela Technologies and Lowes Companies

Given the investment horizon of 90 days Exela Technologies is expected to under-perform the Lowes Companies. In addition to that, Exela Technologies is 6.46 times more volatile than Lowes Companies. It trades about -0.02 of its total potential returns per unit of risk. Lowes Companies is currently generating about 0.05 per unit of volatility. If you would invest  19,770  in Lowes Companies on January 21, 2024 and sell it today you would earn a total of  3,254  from holding Lowes Companies or generate 16.46% return on investment over 90 days.

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

Exela Technologies  vs.  Lowes Companies

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 latest weak performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Lowes Companies

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lowes Companies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Lowes Companies is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Exela Technologies and Lowes Companies

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

The idea behind Exela Technologies and Lowes Companies 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 CEOs Directory module to screen CEOs from public companies around the world.