Correlation Between Exponent and Interface

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

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

Diversification Opportunities for Exponent and Interface

-0.42

Correlation Coefficient

Exponent  Interface

Very good diversification

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

Pair Corralation between Exponent and Interface

Given the investment horizon of 90 days Exponent is expected to under-perform the Interface. But the stock apears to be less risky and, when comparing its historical volatility, Exponent is 2.04 times less risky than Interface. The stock trades about -0.11 of its potential returns per unit of risk. The Interface is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,092  in Interface on May 10, 2025 and sell it today you would earn a total of  396.00  from holding Interface or generate 18.93% return on investment over 90 days.

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

Exponent  vs.  Interface

Exponent

Risk-Adjusted Performance

Weakest

Over the last 90 days Exponent has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Interface

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Interface are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting essential indicators, Interface exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Exponent and Interface

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

The idea behind Exponent and Interface 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.