Correlation Between Guidewire Software and Altria
Can any of the company-specific risk be diversified away by investing in both Guidewire Software and Altria 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 Altria into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidewire Software and Altria Group, you can compare the effects of market volatilities on Guidewire Software and Altria 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 Altria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and Altria.
Diversification Opportunities for Guidewire Software and Altria
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Guidewire and Altria is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and Altria Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Altria Group 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 Altria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Altria Group has no effect on the direction of Guidewire Software i.e., Guidewire Software and Altria go up and down completely randomly.
Pair Corralation between Guidewire Software and Altria
Assuming the 90 days trading horizon Guidewire Software is expected to generate 1.56 times more return on investment than Altria. However, Guidewire Software is 1.56 times more volatile than Altria Group. It trades about 0.45 of its potential returns per unit of risk. Altria Group is currently generating about -0.01 per unit of risk. If you would invest 16,655 in Guidewire Software on November 7, 2024 and sell it today you would earn a total of 4,235 from holding Guidewire Software or generate 25.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Guidewire Software vs. Altria Group
Performance |
| Timeline |
| Guidewire Software |
| Altria Group |
Guidewire Software and Altria Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidewire Software and Altria
The main advantage of trading using opposite Guidewire Software and Altria positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, Altria 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 Altria will offset losses from the drop in Altria's long position.| Guidewire Software vs. OFFICE DEPOT | Guidewire Software vs. KENEDIX OFFICE INV | Guidewire Software vs. CAIRN HOMES EO | Guidewire Software vs. Playa Hotels Resorts |
| Altria vs. Merit Medical Systems | Altria vs. MEDICAL FACILITIES NEW | Altria vs. CSSC Offshore Marine | Altria vs. SCANSOURCE |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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