Correlation Between Guidewire Software and TriMas
Can any of the company-specific risk be diversified away by investing in both Guidewire Software and TriMas 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 TriMas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidewire Software and TriMas, you can compare the effects of market volatilities on Guidewire Software and TriMas 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 TriMas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and TriMas.
Diversification Opportunities for Guidewire Software and TriMas
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Guidewire and TriMas is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and TriMas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TriMas 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 TriMas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TriMas has no effect on the direction of Guidewire Software i.e., Guidewire Software and TriMas go up and down completely randomly.
Pair Corralation between Guidewire Software and TriMas
Assuming the 90 days trading horizon Guidewire Software is expected to generate 1.11 times more return on investment than TriMas. However, Guidewire Software is 1.11 times more volatile than TriMas. It trades about 0.12 of its potential returns per unit of risk. TriMas is currently generating about -0.03 per unit of risk. If you would invest 10,705 in Guidewire Software on October 25, 2024 and sell it today you would earn a total of 6,860 from holding Guidewire Software or generate 64.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidewire Software vs. TriMas
Performance |
| Timeline |
| Guidewire Software |
| TriMas |
Guidewire Software and TriMas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidewire Software and TriMas
The main advantage of trading using opposite Guidewire Software and TriMas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, TriMas 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 TriMas will offset losses from the drop in TriMas' long position.| Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc |
| TriMas vs. CanSino Biologics | TriMas vs. Forsys Metals Corp | TriMas vs. SIERRA METALS | TriMas vs. CITIC Telecom International |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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