Correlation Between Pagerduty and Exela Technologies

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

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

Diversification Opportunities for Pagerduty and Exela Technologies

-0.67

Correlation Coefficient

Pagerduty  Exela Technologies

Excellent diversification

The 3 months correlation between Pagerduty and Exela is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Pagerduty and Exela Technologies Preferred in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Exela Technologies and Pagerduty 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 Pagerduty are associated (or correlated) with Exela Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Exela Technologies has no effect on the direction of Pagerduty i.e., Pagerduty and Exela Technologies go up and down completely randomly.

Pair Corralation between Pagerduty and Exela Technologies

Allowing for the 90-day total investment horizon Pagerduty is expected to under-perform the Exela Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Pagerduty is 2.42 times less risky than Exela Technologies. The stock trades about -0.3 of its potential returns per unit of risk. The Exela Technologies Preferred is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Exela Technologies Preferred on February 9, 2024 and sell it today you would lose (11.00) from holding Exela Technologies Preferred or give up 5.29% of portfolio value over 90 days.

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

Pagerduty  vs.  Exela Technologies Preferred

Pagerduty

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pagerduty has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in June 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Exela Technologies

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Exela Technologies Preferred are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, Exela Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pagerduty and Exela Technologies

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

The idea behind Pagerduty and Exela Technologies Preferred 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.