Correlation Between Zscaler and ACI Worldwide

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

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

Diversification Opportunities for Zscaler and ACI Worldwide

0.82

Correlation Coefficient

Zscaler  ACI Worldwide

Very poor diversification

The 3 months correlation between Zscaler and ACI is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Zscaler and ACI Worldwide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ACI Worldwide and Zscaler 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 Zscaler are associated (or correlated) with ACI Worldwide. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ACI Worldwide has no effect on the direction of Zscaler i.e., Zscaler and ACI Worldwide go up and down completely randomly.

Pair Corralation between Zscaler and ACI Worldwide

Allowing for the 90-day total investment horizon Zscaler is expected to generate 0.95 times more return on investment than ACI Worldwide. However, Zscaler is 1.05 times less risky than ACI Worldwide. It trades about 0.23 of its potential returns per unit of risk. ACI Worldwide is currently generating about 0.13 per unit of risk. If you would invest  15,713  in Zscaler on September 4, 2024 and sell it today you would earn a total of  5,138  from holding Zscaler or generate 32.7% return on investment over 90 days.

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

Zscaler  vs.  ACI Worldwide

Zscaler

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Zscaler are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, Zscaler unveiled solid returns over the last few months and may actually be approaching a breakup point.

ACI Worldwide

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Zscaler and ACI Worldwide

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

The idea behind Zscaler and ACI Worldwide 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.