Correlation Between Progress Software and Telos Corp
Can any of the company-specific risk be diversified away by investing in both Progress Software and Telos Corp 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 Progress Software and Telos Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Progress Software and Telos Corp, you can compare the effects of market volatilities on Progress Software and Telos Corp 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 Progress Software with a short position of Telos Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Progress Software and Telos Corp.
Diversification Opportunities for Progress Software and Telos Corp
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Progress and Telos is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Progress Software and Telos Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telos Corp and Progress 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 Progress Software are associated (or correlated) with Telos Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telos Corp has no effect on the direction of Progress Software i.e., Progress Software and Telos Corp go up and down completely randomly.
Pair Corralation between Progress Software and Telos Corp
Given the investment horizon of 90 days Progress Software is expected to generate 5.63 times less return on investment than Telos Corp. But when comparing it to its historical volatility, Progress Software is 3.78 times less risky than Telos Corp. It trades about 0.03 of its potential returns per unit of risk. Telos Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 242.00 in Telos Corp on September 2, 2024 and sell it today you would earn a total of 98.00 from holding Telos Corp or generate 40.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Progress Software vs. Telos Corp
Performance |
| Timeline |
| Progress Software |
| Telos Corp |
Progress Software and Telos Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Progress Software and Telos Corp
The main advantage of trading using opposite Progress Software and Telos Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Progress Software position performs unexpectedly, Telos Corp 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 Telos Corp will offset losses from the drop in Telos Corp's long position.| Progress Software vs. ePlus inc | Progress Software vs. Agilysys | Progress Software vs. Sapiens International | Progress Software vs. PDF Solutions |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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