Correlation Between Guidewire Software and Model N
Can any of the company-specific risk be diversified away by investing in both Guidewire Software and Model N 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 Guidewire Software and Model N into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Guidewire Software and Model N, you can compare the effects of market volatilities on Guidewire Software and Model N 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 Guidewire Software with a short position of Model N. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and Model N.
Diversification Opportunities for Guidewire Software and Model N
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Guidewire and Model is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and Model N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Model N and Guidewire 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 Guidewire Software are associated (or correlated) with Model N. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Model N has no effect on the direction of Guidewire Software i.e., Guidewire Software and Model N go up and down completely randomly.
Pair Corralation between Guidewire Software and Model N
Given the investment horizon of 90 days Guidewire Software is expected to generate 1.01 times more return on investment than Model N. However, Guidewire Software is 1.01 times more volatile than Model N. It trades about 0.11 of its potential returns per unit of risk. Model N is currently generating about -0.01 per unit of risk. If you would invest 7,385 in Guidewire Software on November 1, 2024 and sell it today you would earn a total of 13,763 from holding Guidewire Software or generate 186.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 70.04% |
| Values | Daily Returns |
Guidewire Software vs. Model N
Performance |
| Timeline |
| Guidewire Software |
| Model N |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Guidewire Software and Model N Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Guidewire Software and Model N
The main advantage of trading using opposite Guidewire Software and Model N positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, Model N 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 Model N will offset losses from the drop in Model N's long position.| Guidewire Software vs. Blackbaud | Guidewire Software vs. Enfusion | Guidewire Software vs. E2open Parent Holdings | Guidewire Software vs. Manhattan Associates |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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