Correlation Between TomTom NV and Aspen Technology
Can any of the company-specific risk be diversified away by investing in both TomTom NV and Aspen Technology 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 TomTom NV and Aspen Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TomTom NV and Aspen Technology, you can compare the effects of market volatilities on TomTom NV and Aspen Technology 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 TomTom NV with a short position of Aspen Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of TomTom NV and Aspen Technology.
Diversification Opportunities for TomTom NV and Aspen Technology
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between TomTom and Aspen is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding TomTom NV and Aspen Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Technology and TomTom NV 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 TomTom NV are associated (or correlated) with Aspen Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Technology has no effect on the direction of TomTom NV i.e., TomTom NV and Aspen Technology go up and down completely randomly.
Pair Corralation between TomTom NV and Aspen Technology
Assuming the 90 days horizon TomTom NV is expected to generate 12.74 times less return on investment than Aspen Technology. In addition to that, TomTom NV is 1.13 times more volatile than Aspen Technology. It trades about 0.01 of its total potential returns per unit of risk. Aspen Technology is currently generating about 0.19 per unit of volatility. If you would invest 17,290 in Aspen Technology on November 3, 2024 and sell it today you would earn a total of 9,065 from holding Aspen Technology or generate 52.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
TomTom NV vs. Aspen Technology
Performance |
| Timeline |
| TomTom NV |
| Aspen Technology |
TomTom NV and Aspen Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TomTom NV and Aspen Technology
The main advantage of trading using opposite TomTom NV and Aspen Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TomTom NV position performs unexpectedly, Aspen Technology 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 Aspen Technology will offset losses from the drop in Aspen Technology's long position.| TomTom NV vs. Aspen Technology | TomTom NV vs. Bentley Systems | TomTom NV vs. Tyler Technologies | TomTom NV vs. Blackbaud |
| Aspen Technology vs. Bentley Systems | Aspen Technology vs. Tyler Technologies | Aspen Technology vs. Blackbaud | Aspen Technology vs. SSC Technologies Holdings |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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