Correlation Between American Software and Manhattan Associates
Can any of the company-specific risk be diversified away by investing in both American Software 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 American Software and Manhattan Associates into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Software and Manhattan Associates, you can compare the effects of market volatilities on American Software 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 American Software with a short position of Manhattan Associates. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Software and Manhattan Associates.
Diversification Opportunities for American Software and Manhattan Associates
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between American and Manhattan is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding American Software and Manhattan Associates in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Manhattan Associates and American 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 American Software 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 American Software i.e., American Software and Manhattan Associates go up and down completely randomly.
Pair Corralation between American Software and Manhattan Associates
Assuming the 90 days horizon American Software is expected to under-perform the Manhattan Associates. But the stock apears to be less risky and, when comparing its historical volatility, American Software is 1.6 times less risky than Manhattan Associates. The stock trades about -0.23 of its potential returns per unit of risk. The Manhattan Associates is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 26,443 in Manhattan Associates on August 30, 2024 and sell it today you would earn a total of 2,325 from holding Manhattan Associates or generate 8.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 37.5% |
| Values | Daily Returns |
American Software vs. Manhattan Associates
Performance |
| Timeline |
| American Software |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Manhattan Associates |
American Software and Manhattan Associates Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Software and Manhattan Associates
The main advantage of trading using opposite American Software and Manhattan Associates positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Software 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.| American Software vs. Paycor HCM | American Software vs. Appfolio | American Software vs. Agilysys | American Software vs. Meridianlink |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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