Correlation Between Alarm Holdings and Manhattan Associates
Can any of the company-specific risk be diversified away by investing in both Alarm Holdings and Manhattan Associates 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 Alarm Holdings and Manhattan Associates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alarm Holdings and Manhattan Associates, you can compare the effects of market volatilities on Alarm Holdings and Manhattan Associates 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 Alarm Holdings with a short position of Manhattan Associates. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alarm Holdings and Manhattan Associates.
Diversification Opportunities for Alarm Holdings and Manhattan Associates
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Alarm and Manhattan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Alarm Holdings and Manhattan Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Associates and Alarm 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 Alarm Holdings are associated (or correlated) with Manhattan Associates. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Manhattan Associates has no effect on the direction of Alarm Holdings i.e., Alarm Holdings and Manhattan Associates go up and down completely randomly.
Pair Corralation between Alarm Holdings and Manhattan Associates
Given the investment horizon of 90 days Alarm Holdings is expected to generate 1.48 times more return on investment than Manhattan Associates. However, Alarm Holdings is 1.48 times more volatile than Manhattan Associates. It trades about 0.28 of its potential returns per unit of risk. Manhattan Associates is currently generating about 0.13 per unit of risk. If you would invest 5,463 in Alarm Holdings on August 28, 2024 and sell it today you would earn a total of 1,023 from holding Alarm Holdings or generate 18.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Alarm Holdings vs. Manhattan Associates
Performance |
| Timeline |
| Alarm Holdings |
| Manhattan Associates |
Alarm Holdings and Manhattan Associates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alarm Holdings and Manhattan Associates
The main advantage of trading using opposite Alarm Holdings and Manhattan Associates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alarm Holdings position performs unexpectedly, Manhattan Associates 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 Manhattan Associates will offset losses from the drop in Manhattan Associates' long position.| Alarm Holdings vs. Paycor HCM | Alarm Holdings vs. Appfolio | Alarm Holdings vs. Agilysys | Alarm Holdings vs. Alkami Technology |
| Manhattan Associates vs. Blackbaud | Manhattan Associates vs. Bentley Systems | Manhattan Associates vs. Paylocity Holdng | Manhattan Associates vs. ANSYS Inc |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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