Correlation Between Affirm Holdings and Palo Alto
Can any of the company-specific risk be diversified away by investing in both Affirm Holdings and Palo Alto 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 Affirm Holdings and Palo Alto into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affirm Holdings and Palo Alto Networks, you can compare the effects of market volatilities on Affirm Holdings and Palo Alto 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 Affirm Holdings with a short position of Palo Alto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affirm Holdings and Palo Alto.
Diversification Opportunities for Affirm Holdings and Palo Alto
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Affirm and Palo is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Affirm Holdings and Palo Alto Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palo Alto Networks and Affirm Holdings 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 Affirm Holdings are associated (or correlated) with Palo Alto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palo Alto Networks has no effect on the direction of Affirm Holdings i.e., Affirm Holdings and Palo Alto go up and down completely randomly.
Pair Corralation between Affirm Holdings and Palo Alto
Given the investment horizon of 90 days Affirm Holdings is expected to under-perform the Palo Alto. In addition to that, Affirm Holdings is 1.7 times more volatile than Palo Alto Networks. It trades about -0.22 of its total potential returns per unit of risk. Palo Alto Networks is currently generating about -0.01 per unit of volatility. If you would invest 18,822 in Palo Alto Networks on October 24, 2024 and sell it today you would lose (123.00) from holding Palo Alto Networks or give up 0.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Affirm Holdings vs. Palo Alto Networks
Performance |
| Timeline |
| Affirm Holdings |
| Palo Alto Networks |
Affirm Holdings and Palo Alto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Affirm Holdings and Palo Alto
The main advantage of trading using opposite Affirm Holdings and Palo Alto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affirm Holdings position performs unexpectedly, Palo Alto 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 Palo Alto will offset losses from the drop in Palo Alto's long position.| Affirm Holdings vs. Upstart Holdings | Affirm Holdings vs. SoFi Technologies | Affirm Holdings vs. Roblox Corp | Affirm Holdings vs. Robinhood Markets |
| Palo Alto vs. Zscaler | Palo Alto vs. Cloudflare | Palo Alto vs. Okta Inc | Palo Alto vs. Adobe Systems Incorporated |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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