Correlation Between Stratasys and AW Revenue

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

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

Diversification Opportunities for Stratasys and AW Revenue

0.49

Correlation Coefficient

Stratasys  AW Revenue

Very weak diversification

The 3 months correlation between Stratasys and AWRRF is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Stratasys and AW Revenue Royalties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AW Revenue Royalties and Stratasys 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 Stratasys are associated (or correlated) with AW Revenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AW Revenue Royalties has no effect on the direction of Stratasys i.e., Stratasys and AW Revenue go up and down completely randomly.

Pair Corralation between Stratasys and AW Revenue

Given the investment horizon of 90 days Stratasys is expected to generate 5.67 times more return on investment than AW Revenue. However, Stratasys is 5.67 times more volatile than AW Revenue Royalties. It trades about 0.14 of its potential returns per unit of risk. AW Revenue Royalties is currently generating about 0.28 per unit of risk. If you would invest  697.00  in Stratasys on September 1, 2024 and sell it today you would earn a total of  265.00  from holding Stratasys or generate 38.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	50.79%
Values	Daily Returns

Stratasys  vs.  AW Revenue Royalties

Stratasys

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Stratasys are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Stratasys unveiled solid returns over the last few months and may actually be approaching a breakup point.

AW Revenue Royalties

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days AW Revenue Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly unsteady basic indicators, AW Revenue reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Stratasys and AW Revenue

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

The idea behind Stratasys and AW Revenue Royalties 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.