Correlation Between Exponent and Maximus

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

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

Diversification Opportunities for Exponent and Maximus

0.58

Correlation Coefficient

Exponent  Maximus

Very weak diversification

The 3 months correlation between Exponent and Maximus is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and Maximus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maximus and Exponent 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 Exponent 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 Exponent i.e., Exponent and Maximus go up and down completely randomly.

Pair Corralation between Exponent and Maximus

Given the investment horizon of 90 days Exponent is expected to under-perform the Maximus. But the stock apears to be less risky and, when comparing its historical volatility, Exponent is 1.26 times less risky than Maximus. The stock trades about -0.18 of its potential returns per unit of risk. The Maximus is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  7,545  in Maximus on February 2, 2025 and sell it today you would lose (857.00) from holding Maximus or give up 11.36% of portfolio value over 90 days.

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

Exponent  vs.  Maximus

Exponent

Risk-Adjusted Performance

Very Weak

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in June 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Maximus

Risk-Adjusted Performance

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 latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Exponent and Maximus

The main advantage of trading using opposite Exponent and Maximus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exponent 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.

The idea behind Exponent and Maximus 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.