Correlation Between Infracommerce CXaaS and AvalonBay Communities

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

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

Diversification Opportunities for Infracommerce CXaaS and AvalonBay Communities

-0.84

Correlation Coefficient

Infracommerce CXaaS  AvalonBay Communities

Pay attention - limited upside

The 3 months correlation between Infracommerce and AvalonBay is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding Infracommerce CXaaS SA and AvalonBay Communities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvalonBay Communities and Infracommerce CXaaS 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 Infracommerce CXaaS SA are associated (or correlated) with AvalonBay Communities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvalonBay Communities has no effect on the direction of Infracommerce CXaaS i.e., Infracommerce CXaaS and AvalonBay Communities go up and down completely randomly.

Pair Corralation between Infracommerce CXaaS and AvalonBay Communities

Assuming the 90 days trading horizon Infracommerce CXaaS SA is expected to under-perform the AvalonBay Communities. In addition to that, Infracommerce CXaaS is 3.76 times more volatile than AvalonBay Communities. It trades about -0.12 of its total potential returns per unit of risk. AvalonBay Communities is currently generating about 0.06 per unit of volatility. If you would invest  32,034  in AvalonBay Communities on September 23, 2024 and sell it today you would earn a total of  1,890  from holding AvalonBay Communities or generate 5.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Infracommerce CXaaS SA  vs.  AvalonBay Communities

Infracommerce CXaaS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Infracommerce CXaaS SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AvalonBay Communities

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in AvalonBay Communities are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, AvalonBay Communities may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Infracommerce CXaaS and AvalonBay Communities

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

The idea behind Infracommerce CXaaS SA and AvalonBay Communities 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .