Correlation Between Guidewire Software and Big 5
Can any of the company-specific risk be diversified away by investing in both Guidewire Software and Big 5 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 Guidewire Software and Big 5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidewire Software and Big 5 Sporting, you can compare the effects of market volatilities on Guidewire Software and Big 5 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 Guidewire Software with a short position of Big 5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and Big 5.
Diversification Opportunities for Guidewire Software and Big 5
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Guidewire and Big is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and Big 5 Sporting in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Big 5 Sporting and Guidewire Software 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 Guidewire Software are associated (or correlated) with Big 5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Big 5 Sporting has no effect on the direction of Guidewire Software i.e., Guidewire Software and Big 5 go up and down completely randomly.
Pair Corralation between Guidewire Software and Big 5
Assuming the 90 days trading horizon Guidewire Software is expected to under-perform the Big 5. In addition to that, Guidewire Software is 1.13 times more volatile than Big 5 Sporting. It trades about -0.12 of its total potential returns per unit of risk. Big 5 Sporting is currently generating about -0.02 per unit of volatility. If you would invest 156.00 in Big 5 Sporting on September 13, 2024 and sell it today you would lose (4.00) from holding Big 5 Sporting or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Guidewire Software vs. Big 5 Sporting
Performance |
| Timeline |
| Guidewire Software |
| Big 5 Sporting |
Guidewire Software and Big 5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidewire Software and Big 5
The main advantage of trading using opposite Guidewire Software and Big 5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, Big 5 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 Big 5 will offset losses from the drop in Big 5's long position.| Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc |
| Big 5 vs. Superior Plus Corp | Big 5 vs. SIVERS SEMICONDUCTORS AB | Big 5 vs. NorAm Drilling AS | Big 5 vs. Norsk Hydro ASA |
Check out your portfolio center.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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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