Correlation Between Exchange Income and Transcontinental

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

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

Diversification Opportunities for Exchange Income and Transcontinental

0.03

Correlation Coefficient

Exchange Income  Transcontinental

Significant diversification

The 3 months correlation between Exchange and Transcontinental is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Income and Transcontinental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transcontinental and Exchange Income 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 Exchange Income are associated (or correlated) with Transcontinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transcontinental has no effect on the direction of Exchange Income i.e., Exchange Income and Transcontinental go up and down completely randomly.

Pair Corralation between Exchange Income and Transcontinental

Assuming the 90 days trading horizon Exchange Income is expected to generate 0.9 times more return on investment than Transcontinental. However, Exchange Income is 1.11 times less risky than Transcontinental. It trades about 0.35 of its potential returns per unit of risk. Transcontinental is currently generating about -0.02 per unit of risk. If you would invest  5,427  in Exchange Income on May 8, 2025 and sell it today you would earn a total of  1,251  from holding Exchange Income or generate 23.05% return on investment over 90 days.

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

Exchange Income  vs.  Transcontinental

Exchange Income

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Exchange Income are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Exchange Income displayed solid returns over the last few months and may actually be approaching a breakup point.

Transcontinental

Risk-Adjusted Performance

Soft

Over the last 90 days Transcontinental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Transcontinental is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Exchange Income and Transcontinental

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

The idea behind Exchange Income and Transcontinental 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.