Correlation Between Covivio Hotels and Axway Software
Can any of the company-specific risk be diversified away by investing in both Covivio Hotels and Axway 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 Covivio Hotels and Axway Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Covivio Hotels and Axway Software, you can compare the effects of market volatilities on Covivio Hotels and Axway 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 Covivio Hotels with a short position of Axway Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Covivio Hotels and Axway Software.
Diversification Opportunities for Covivio Hotels and Axway Software
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Covivio and Axway is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Covivio Hotels and Axway Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axway Software and Covivio Hotels 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 Covivio Hotels are associated (or correlated) with Axway Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axway Software has no effect on the direction of Covivio Hotels i.e., Covivio Hotels and Axway Software go up and down completely randomly.
Pair Corralation between Covivio Hotels and Axway Software
Assuming the 90 days trading horizon Covivio Hotels is expected to under-perform the Axway Software. But the stock apears to be less risky and, when comparing its historical volatility, Covivio Hotels is 2.08 times less risky than Axway Software. The stock trades about -0.26 of its potential returns per unit of risk. The Axway Software is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 2,780 in Axway Software on August 30, 2024 and sell it today you would lose (30.00) from holding Axway Software or give up 1.08% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Covivio Hotels vs. Axway Software
Performance |
| Timeline |
| Covivio Hotels |
| Axway Software |
Covivio Hotels and Axway Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Covivio Hotels and Axway Software
The main advantage of trading using opposite Covivio Hotels and Axway Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Covivio Hotels position performs unexpectedly, Axway 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 Axway Software will offset losses from the drop in Axway Software's long position.| Covivio Hotels vs. Covivio SA | Covivio Hotels vs. Altarea SCA | Covivio Hotels vs. Icade SA | Covivio Hotels vs. Gecina SA |
| Axway Software vs. Aubay Socit Anonyme | Axway Software vs. Infotel SA | Axway Software vs. IT Link | Axway Software vs. Manitou BF SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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