Correlation Between CSG Systems and Rapid7
Can any of the company-specific risk be diversified away by investing in both CSG Systems and Rapid7 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 CSG Systems and Rapid7 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSG Systems International and Rapid7 Inc, you can compare the effects of market volatilities on CSG Systems and Rapid7 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 CSG Systems with a short position of Rapid7. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSG Systems and Rapid7.
Diversification Opportunities for CSG Systems and Rapid7
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between CSG and Rapid7 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding CSG Systems International and Rapid7 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapid7 Inc and CSG Systems 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 CSG Systems International are associated (or correlated) with Rapid7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapid7 Inc has no effect on the direction of CSG Systems i.e., CSG Systems and Rapid7 go up and down completely randomly.
Pair Corralation between CSG Systems and Rapid7
Given the investment horizon of 90 days CSG Systems International is expected to under-perform the Rapid7. But the stock apears to be less risky and, when comparing its historical volatility, CSG Systems International is 2.24 times less risky than Rapid7. The stock trades about -0.03 of its potential returns per unit of risk. The Rapid7 Inc is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 3,933 in Rapid7 Inc on September 18, 2024 and sell it today you would lose (29.00) from holding Rapid7 Inc or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSG Systems International vs. Rapid7 Inc
Performance |
| Timeline |
| CSG Systems International |
| Rapid7 Inc |
CSG Systems and Rapid7 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSG Systems and Rapid7
The main advantage of trading using opposite CSG Systems and Rapid7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSG Systems position performs unexpectedly, Rapid7 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 Rapid7 will offset losses from the drop in Rapid7's long position.| CSG Systems vs. Oneconnect Financial Technology | CSG Systems vs. Global Business Travel | CSG Systems vs. Alight Inc | CSG Systems vs. CS Disco LLC |
| Rapid7 vs. Qualys Inc | Rapid7 vs. CyberArk Software | Rapid7 vs. Varonis Systems | Rapid7 vs. Check Point Software |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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