Correlation Between Guidewire Software and Comcast

Can any of the company-specific risk be diversified away by investing in both Guidewire Software and Comcast 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 Guidewire Software and Comcast into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guidewire Software and Comcast, you can compare the effects of market volatilities on Guidewire Software and Comcast 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 Guidewire Software with a short position of Comcast. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guidewire Software and Comcast.

Diversification Opportunities for Guidewire Software and Comcast

0.9

Correlation Coefficient

Guidewire Software  Comcast

Almost no diversification

The 3 months correlation between Guidewire and Comcast is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and Comcast in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast and Guidewire Software 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 Guidewire Software are associated (or correlated) with Comcast. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast has no effect on the direction of Guidewire Software i.e., Guidewire Software and Comcast go up and down completely randomly.

Pair Corralation between Guidewire Software and Comcast

Assuming the 90 days trading horizon Guidewire Software is expected to generate 1.24 times less return on investment than Comcast. In addition to that, Guidewire Software is 1.35 times more volatile than Comcast. It trades about 0.04 of its total potential returns per unit of risk. Comcast is currently generating about 0.08 per unit of volatility. If you would invest  3,490  in Comcast on September 14, 2024 and sell it today you would earn a total of  282.00  from holding Comcast or generate 8.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Guidewire Software  vs.  Comcast

Guidewire Software

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Guidewire Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Comcast

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Comcast are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Comcast may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Guidewire Software and Comcast

The main advantage of trading using opposite Guidewire Software and Comcast positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guidewire Software position performs unexpectedly, Comcast 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 Comcast will offset losses from the drop in Comcast's long position.

The idea behind Guidewire Software and Comcast 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.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.