Correlation Between IDEX Biometrics and American Software
Can any of the company-specific risk be diversified away by investing in both IDEX Biometrics and American 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 IDEX Biometrics and American Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IDEX Biometrics ASA and American Software, you can compare the effects of market volatilities on IDEX Biometrics and American 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 IDEX Biometrics with a short position of American Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of IDEX Biometrics and American Software.
Diversification Opportunities for IDEX Biometrics and American Software
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between IDEX and American is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding IDEX Biometrics ASA and American Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Software and IDEX Biometrics 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 IDEX Biometrics ASA are associated (or correlated) with American Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Software has no effect on the direction of IDEX Biometrics i.e., IDEX Biometrics and American Software go up and down completely randomly.
Pair Corralation between IDEX Biometrics and American Software
Assuming the 90 days horizon IDEX Biometrics ASA is expected to generate 4.09 times more return on investment than American Software. However, IDEX Biometrics is 4.09 times more volatile than American Software. It trades about 0.1 of its potential returns per unit of risk. American Software is currently generating about -0.01 per unit of risk. If you would invest 6.00 in IDEX Biometrics ASA on August 28, 2024 and sell it today you would earn a total of 11.00 from holding IDEX Biometrics ASA or generate 183.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 34.28% |
| Values | Daily Returns |
IDEX Biometrics ASA vs. American Software
Performance |
| Timeline |
| IDEX Biometrics ASA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| American Software |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
IDEX Biometrics and American Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IDEX Biometrics and American Software
The main advantage of trading using opposite IDEX Biometrics and American Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IDEX Biometrics position performs unexpectedly, American 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 American Software will offset losses from the drop in American Software's long position.| IDEX Biometrics vs. Issuer Direct Corp | IDEX Biometrics vs. eGain | IDEX Biometrics vs. Research Solutions | IDEX Biometrics vs. Ackroo Inc |
| American Software vs. Paycor HCM | American Software vs. Appfolio | American Software vs. Agilysys | American Software vs. Meridianlink |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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