Correlation Between AEON STORES and Guidewire Software
Can any of the company-specific risk be diversified away by investing in both AEON STORES and Guidewire Software 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 AEON STORES and Guidewire Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AEON STORES and Guidewire Software, you can compare the effects of market volatilities on AEON STORES and Guidewire Software 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 AEON STORES with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of AEON STORES and Guidewire Software.
Diversification Opportunities for AEON STORES and Guidewire Software
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between AEON and Guidewire is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding AEON STORES and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and AEON STORES 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 AEON STORES are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of AEON STORES i.e., AEON STORES and Guidewire Software go up and down completely randomly.
Pair Corralation between AEON STORES and Guidewire Software
Assuming the 90 days trading horizon AEON STORES is expected to under-perform the Guidewire Software. In addition to that, AEON STORES is 1.35 times more volatile than Guidewire Software. It trades about -0.06 of its total potential returns per unit of risk. Guidewire Software is currently generating about 0.08 per unit of volatility. If you would invest 16,135 in Guidewire Software on October 11, 2024 and sell it today you would earn a total of 335.00 from holding Guidewire Software or generate 2.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
AEON STORES vs. Guidewire Software
Performance |
| Timeline |
| AEON STORES |
| Guidewire Software |
AEON STORES and Guidewire Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AEON STORES and Guidewire Software
The main advantage of trading using opposite AEON STORES and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AEON STORES position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.| AEON STORES vs. Highlight Communications AG | AEON STORES vs. Singapore Telecommunications Limited | AEON STORES vs. International Consolidated Airlines | AEON STORES vs. China Eastern Airlines |
| Guidewire Software vs. G8 EDUCATION | Guidewire Software vs. Luckin Coffee | Guidewire Software vs. Xinhua Winshare Publishing | Guidewire Software vs. GEAR4MUSIC LS 10 |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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