Correlation Between AXWAY SOFTWARE and Microsoft

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

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

Diversification Opportunities for AXWAY SOFTWARE and Microsoft

0.61

Correlation Coefficient

AXWAY SOFTWARE  Microsoft

Poor diversification

The 3 months correlation between AXWAY and Microsoft is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding AXWAY SOFTWARE EO and Microsoft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microsoft and AXWAY 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 AXWAY SOFTWARE EO are associated (or correlated) with Microsoft. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microsoft has no effect on the direction of AXWAY SOFTWARE i.e., AXWAY SOFTWARE and Microsoft go up and down completely randomly.

Pair Corralation between AXWAY SOFTWARE and Microsoft

Assuming the 90 days horizon AXWAY SOFTWARE EO is expected to generate 0.91 times more return on investment than Microsoft. However, AXWAY SOFTWARE EO is 1.09 times less risky than Microsoft. It trades about 0.21 of its potential returns per unit of risk. Microsoft is currently generating about 0.07 per unit of risk. If you would invest  2,270  in AXWAY SOFTWARE EO on September 3, 2024 and sell it today you would earn a total of  430.00  from holding AXWAY SOFTWARE EO or generate 18.94% return on investment over 90 days.

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

AXWAY SOFTWARE EO  vs.  Microsoft

AXWAY SOFTWARE EO

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AXWAY SOFTWARE EO are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AXWAY SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

Microsoft

Risk-Adjusted Performance

5 of 100

Modest

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

Pair Trading with AXWAY SOFTWARE and Microsoft

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

The idea behind AXWAY SOFTWARE EO and Microsoft 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.

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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..