Correlation Between Sage Group and Xero
Can any of the company-specific risk be diversified away by investing in both Sage Group and Xero 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 Sage Group and Xero into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sage Group PLC and Xero Limited, you can compare the effects of market volatilities on Sage Group and Xero 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 Sage Group with a short position of Xero. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sage Group and Xero.
Diversification Opportunities for Sage Group and Xero
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sage and Xero is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Sage Group PLC and Xero Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xero Limited and Sage Group 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 Sage Group PLC are associated (or correlated) with Xero. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xero Limited has no effect on the direction of Sage Group i.e., Sage Group and Xero go up and down completely randomly.
Pair Corralation between Sage Group and Xero
Assuming the 90 days horizon Sage Group PLC is expected to generate 4.27 times more return on investment than Xero. However, Sage Group is 4.27 times more volatile than Xero Limited. It trades about 0.22 of its potential returns per unit of risk. Xero Limited is currently generating about 0.54 per unit of risk. If you would invest 5,343 in Sage Group PLC on August 25, 2024 and sell it today you would earn a total of 1,078 from holding Sage Group PLC or generate 20.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sage Group PLC vs. Xero Limited
Performance |
| Timeline |
| Sage Group PLC |
| Xero Limited |
Sage Group and Xero Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sage Group and Xero
The main advantage of trading using opposite Sage Group and Xero positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sage Group position performs unexpectedly, Xero 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 Xero will offset losses from the drop in Xero's long position.| Sage Group vs. Salesforce | Sage Group vs. SAP SE ADR | Sage Group vs. ServiceNow | Sage Group vs. Intuit Inc |
| Xero vs. Temenos Group AG | Xero vs. RenoWorks Software | Xero vs. Sage Group PLC | Xero vs. 01 Communique Laboratory |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope |