Correlation Between Axway Software and Ameren Corp
Can any of the company-specific risk be diversified away by investing in both Axway Software and Ameren Corp 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 Axway Software and Ameren Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Axway Software SA and Ameren Corp, you can compare the effects of market volatilities on Axway Software and Ameren Corp 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 Axway Software with a short position of Ameren Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Ameren Corp.
Diversification Opportunities for Axway Software and Ameren Corp
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Axway and Ameren is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Ameren Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ameren Corp and Axway 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 Axway Software SA are associated (or correlated) with Ameren Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ameren Corp has no effect on the direction of Axway Software i.e., Axway Software and Ameren Corp go up and down completely randomly.
Pair Corralation between Axway Software and Ameren Corp
Assuming the 90 days trading horizon Axway Software SA is expected to under-perform the Ameren Corp. But the stock apears to be less risky and, when comparing its historical volatility, Axway Software SA is 1.48 times less risky than Ameren Corp. The stock trades about -0.16 of its potential returns per unit of risk. The Ameren Corp is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 9,188 in Ameren Corp on September 12, 2024 and sell it today you would lose (75.00) from holding Ameren Corp or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Axway Software SA vs. Ameren Corp
Performance |
| Timeline |
| Axway Software SA |
| Ameren Corp |
Axway Software and Ameren Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Axway Software and Ameren Corp
The main advantage of trading using opposite Axway Software and Ameren Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Axway Software position performs unexpectedly, Ameren Corp 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 Ameren Corp will offset losses from the drop in Ameren Corp's long position.| Axway Software vs. Evolution Gaming Group | Axway Software vs. McEwen Mining | Axway Software vs. Gaming Realms plc | Axway Software vs. Edita Food Industries |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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