Correlation Between Marin Software and E2open Parent
Can any of the company-specific risk be diversified away by investing in both Marin Software and E2open Parent 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 Marin Software and E2open Parent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marin Software and E2open Parent Holdings, you can compare the effects of market volatilities on Marin Software and E2open Parent 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 Marin Software with a short position of E2open Parent. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marin Software and E2open Parent.
Diversification Opportunities for Marin Software and E2open Parent
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Marin and E2open is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Marin Software and E2open Parent Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E2open Parent Holdings and Marin 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 Marin Software are associated (or correlated) with E2open Parent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E2open Parent Holdings has no effect on the direction of Marin Software i.e., Marin Software and E2open Parent go up and down completely randomly.
Pair Corralation between Marin Software and E2open Parent
Given the investment horizon of 90 days Marin Software is expected to generate 1.58 times more return on investment than E2open Parent. However, Marin Software is 1.58 times more volatile than E2open Parent Holdings. It trades about 0.01 of its potential returns per unit of risk. E2open Parent Holdings is currently generating about -0.08 per unit of risk. If you would invest 245.00 in Marin Software on September 1, 2024 and sell it today you would lose (21.00) from holding Marin Software or give up 8.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marin Software vs. E2open Parent Holdings
Performance |
| Timeline |
| Marin Software |
| E2open Parent Holdings |
Marin Software and E2open Parent Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marin Software and E2open Parent
The main advantage of trading using opposite Marin Software and E2open Parent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marin Software position performs unexpectedly, E2open Parent 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 E2open Parent will offset losses from the drop in E2open Parent's long position.The idea behind Marin Software and E2open Parent 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.| E2open Parent vs. Blackbaud | E2open Parent vs. Enfusion | E2open Parent vs. Envestnet | E2open Parent vs. Hitek Global Ordinary |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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