Correlation Between Lion One and Guidewire Software

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Can any of the company-specific risk be diversified away by investing in both Lion One and Guidewire Software 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 Lion One and Guidewire Software into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lion One Metals and Guidewire Software, you can compare the effects of market volatilities on Lion One and Guidewire Software 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 Lion One with a short position of Guidewire Software. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lion One and Guidewire Software.

Diversification Opportunities for Lion One and Guidewire Software

LionGuidewireDiversified AwayLionGuidewireDiversified Away100%
-0.16
  Correlation Coefficient

Good diversification

The 3 months correlation between Lion and Guidewire is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Lion One Metals and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and Lion One 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 Lion One Metals are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of Lion One i.e., Lion One and Guidewire Software go up and down completely randomly.

Pair Corralation between Lion One and Guidewire Software

Assuming the 90 days horizon Lion One Metals is expected to under-perform the Guidewire Software. In addition to that, Lion One is 2.07 times more volatile than Guidewire Software. It trades about -0.04 of its total potential returns per unit of risk. Guidewire Software is currently generating about 0.04 per unit of volatility. If you would invest  15,655  in Guidewire Software on September 24, 2024 and sell it today you would earn a total of  795.00  from holding Guidewire Software or generate 5.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Lion One Metals  vs.  Guidewire Software

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -20-100102030
JavaScript chart by amCharts 3.21.15LY1 0GS
       Timeline  
Lion One Metals 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lion One Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec0.160.180.20.220.240.26
Guidewire Software 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
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 fragile basic indicators, Guidewire Software may actually be approaching a critical reversion point that can send shares even higher in January 2025.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec160165170175180185190195

Lion One and Guidewire Software Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.44-6.32-4.2-2.08-0.0341.943.986.028.0610.1 0.020.030.040.050.06
JavaScript chart by amCharts 3.21.15LY1 0GS
       Returns  

Pair Trading with Lion One and Guidewire Software

The main advantage of trading using opposite Lion One and Guidewire Software positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lion One position performs unexpectedly, Guidewire Software 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 Guidewire Software will offset losses from the drop in Guidewire Software's long position.
The idea behind Lion One Metals and Guidewire Software 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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