Correlation Between Motorola Solutions and EXFO

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Can any of the company-specific risk be diversified away by investing in both Motorola Solutions and EXFO 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 Motorola Solutions and EXFO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motorola Solutions and EXFO Inc, you can compare the effects of market volatilities on Motorola Solutions and EXFO 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 Motorola Solutions with a short position of EXFO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motorola Solutions and EXFO.

Diversification Opportunities for Motorola Solutions and EXFO

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Motorola and EXFO is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Motorola Solutions and EXFO Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EXFO Inc and Motorola Solutions 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 Motorola Solutions are associated (or correlated) with EXFO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EXFO Inc has no effect on the direction of Motorola Solutions i.e., Motorola Solutions and EXFO go up and down completely randomly.

Pair Corralation between Motorola Solutions and EXFO

If you would invest  32,774  in Motorola Solutions on December 29, 2023 and sell it today you would earn a total of  2,724  from holding Motorola Solutions or generate 8.31% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

Motorola Solutions  vs.  EXFO Inc

 Performance 
       Timeline  
Motorola Solutions 

Risk-Adjusted Performance

16 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Motorola Solutions are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Motorola Solutions demonstrated solid returns over the last few months and may actually be approaching a breakup point.
EXFO Inc 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days EXFO Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, EXFO is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Motorola Solutions and EXFO Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Motorola Solutions and EXFO

The main advantage of trading using opposite Motorola Solutions and EXFO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motorola Solutions position performs unexpectedly, EXFO 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 EXFO will offset losses from the drop in EXFO's long position.
The idea behind Motorola Solutions and EXFO Inc 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 Anywhere module to track or share privately all of your investments from the convenience of any device.

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