Correlation Between Sto SE and Guidewire Software
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By analyzing existing cross correlation between Sto SE Co and Guidewire Software, you can compare the effects of market volatilities on Sto SE and Guidewire 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 Sto SE with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sto SE and Guidewire Software.
Diversification Opportunities for Sto SE and Guidewire Software
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Sto and Guidewire is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Sto SE Co and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and Sto SE 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 Sto SE Co are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of Sto SE i.e., Sto SE and Guidewire Software go up and down completely randomly.
Pair Corralation between Sto SE and Guidewire Software
Assuming the 90 days trading horizon Sto SE Co is expected to under-perform the Guidewire Software. But the stock apears to be less risky and, when comparing its historical volatility, Sto SE Co is 1.79 times less risky than Guidewire Software. The stock trades about -0.2 of its potential returns per unit of risk. The Guidewire Software is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 16,860 in Guidewire Software on September 13, 2024 and sell it today you would lose (725.00) from holding Guidewire Software or give up 4.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sto SE Co vs. Guidewire Software
Performance |
| Timeline |
| Sto SE |
| Guidewire Software |
Sto SE and Guidewire Software Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sto SE and Guidewire Software
The main advantage of trading using opposite Sto SE and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sto SE position performs unexpectedly, Guidewire 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.The idea behind Sto SE Co and Guidewire Software 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.| Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc | Guidewire Software vs. Apple Inc |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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