Correlation Between Endava and Affirm Holdings
Can any of the company-specific risk be diversified away by investing in both Endava and Affirm Holdings 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 Endava and Affirm Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Endava and Affirm Holdings, you can compare the effects of market volatilities on Endava and Affirm Holdings 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 Endava with a short position of Affirm Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Endava and Affirm Holdings.
Diversification Opportunities for Endava and Affirm Holdings
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Endava and Affirm is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Endava and Affirm Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Affirm Holdings and Endava 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 Endava are associated (or correlated) with Affirm Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Affirm Holdings has no effect on the direction of Endava i.e., Endava and Affirm Holdings go up and down completely randomly.
Pair Corralation between Endava and Affirm Holdings
Given the investment horizon of 90 days Endava is expected to generate 0.37 times more return on investment than Affirm Holdings. However, Endava is 2.7 times less risky than Affirm Holdings. It trades about 0.06 of its potential returns per unit of risk. Affirm Holdings is currently generating about -0.2 per unit of risk. If you would invest 3,097 in Endava on October 23, 2024 and sell it today you would earn a total of 42.00 from holding Endava or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Endava vs. Affirm Holdings
Performance |
| Timeline |
| Endava |
| Affirm Holdings |
Endava and Affirm Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Endava and Affirm Holdings
The main advantage of trading using opposite Endava and Affirm Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Endava position performs unexpectedly, Affirm Holdings 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 Affirm Holdings will offset losses from the drop in Affirm Holdings' long position.The idea behind Endava and Affirm Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Affirm Holdings vs. Upstart Holdings | Affirm Holdings vs. SoFi Technologies | Affirm Holdings vs. Roblox Corp | Affirm Holdings vs. Robinhood Markets |
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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