Correlation Between Seven West and Axcelis Technologies
Can any of the company-specific risk be diversified away by investing in both Seven West and Axcelis Technologies 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 Seven West and Axcelis Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Seven West Media and Axcelis Technologies, you can compare the effects of market volatilities on Seven West and Axcelis Technologies 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 Seven West with a short position of Axcelis Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seven West and Axcelis Technologies.
Diversification Opportunities for Seven West and Axcelis Technologies
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Seven and Axcelis is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Seven West Media and Axcelis Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axcelis Technologies and Seven West 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 Seven West Media are associated (or correlated) with Axcelis Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axcelis Technologies has no effect on the direction of Seven West i.e., Seven West and Axcelis Technologies go up and down completely randomly.
Pair Corralation between Seven West and Axcelis Technologies
Assuming the 90 days horizon Seven West Media is expected to generate 3.08 times more return on investment than Axcelis Technologies. However, Seven West is 3.08 times more volatile than Axcelis Technologies. It trades about 0.04 of its potential returns per unit of risk. Axcelis Technologies is currently generating about -0.14 per unit of risk. If you would invest 8.10 in Seven West Media on October 14, 2024 and sell it today you would earn a total of 0.00 from holding Seven West Media or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Seven West Media vs. Axcelis Technologies
Performance |
Timeline |
Seven West Media |
Axcelis Technologies |
Seven West and Axcelis Technologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Seven West and Axcelis Technologies
The main advantage of trading using opposite Seven West and Axcelis Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seven West position performs unexpectedly, Axcelis Technologies 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 Axcelis Technologies will offset losses from the drop in Axcelis Technologies' long position.Seven West vs. ARDAGH METAL PACDL 0001 | Seven West vs. Zoom Video Communications | Seven West vs. Hemisphere Energy Corp | Seven West vs. Yuexiu Transport Infrastructure |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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