Correlation Between Xero and Temenos Group
Can any of the company-specific risk be diversified away by investing in both Xero and Temenos Group 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 Xero and Temenos Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xero Limited and Temenos Group AG, you can compare the effects of market volatilities on Xero and Temenos Group 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 Xero with a short position of Temenos Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xero and Temenos Group.
Diversification Opportunities for Xero and Temenos Group
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Xero and Temenos is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Xero Limited and Temenos Group AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Temenos Group AG and Xero 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 Xero Limited are associated (or correlated) with Temenos Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Temenos Group AG has no effect on the direction of Xero i.e., Xero and Temenos Group go up and down completely randomly.
Pair Corralation between Xero and Temenos Group
Assuming the 90 days horizon Xero Limited is expected to generate 0.77 times more return on investment than Temenos Group. However, Xero Limited is 1.29 times less risky than Temenos Group. It trades about 0.1 of its potential returns per unit of risk. Temenos Group AG is currently generating about 0.02 per unit of risk. If you would invest 4,635 in Xero Limited on August 29, 2024 and sell it today you would earn a total of 6,205 from holding Xero Limited or generate 133.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xero Limited vs. Temenos Group AG
Performance |
| Timeline |
| Xero Limited |
| Temenos Group AG |
Xero and Temenos Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xero and Temenos Group
The main advantage of trading using opposite Xero and Temenos Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xero position performs unexpectedly, Temenos Group 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 Temenos Group will offset losses from the drop in Temenos Group's long position.| Xero vs. Temenos Group AG | Xero vs. RenoWorks Software | Xero vs. Sage Group PLC | Xero vs. 01 Communique Laboratory |
| Temenos Group vs. 01 Communique Laboratory | Temenos Group vs. LifeSpeak | Temenos Group vs. RESAAS Services | Temenos Group vs. RenoWorks Software |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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