Correlation Between Exponent and Thomson Reuters

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

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

Diversification Opportunities for Exponent and Thomson Reuters

-0.33

Correlation Coefficient

Exponent  Thomson Reuters

Very good diversification

The 3 months correlation between Exponent and Thomson is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Exponent and Thomson Reuters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomson Reuters 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 Thomson Reuters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomson Reuters has no effect on the direction of Exponent i.e., Exponent and Thomson Reuters go up and down completely randomly.

Pair Corralation between Exponent and Thomson Reuters

Given the investment horizon of 90 days Exponent is expected to under-perform the Thomson Reuters. In addition to that, Exponent is 1.07 times more volatile than Thomson Reuters. It trades about -0.07 of its total potential returns per unit of risk. Thomson Reuters is currently generating about 0.11 per unit of volatility. If you would invest  17,571  in Thomson Reuters on February 21, 2025 and sell it today you would earn a total of  1,841  from holding Thomson Reuters or generate 10.48% return on investment over 90 days.

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

Exponent  vs.  Thomson Reuters

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 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.

Thomson Reuters

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thomson Reuters are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Thomson Reuters may actually be approaching a critical reversion point that can send shares even higher in June 2025.

Pair Trading with Exponent and Thomson Reuters

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

The idea behind Exponent and Thomson Reuters 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .