Correlation Between Axway Software and Waste Management

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

By analyzing existing cross correlation between Axway Software SA and Waste Management, you can compare the effects of market volatilities on Axway Software and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Axway Software and Waste Management.

Diversification Opportunities for Axway Software and Waste Management

0.48

Correlation Coefficient

Axway Software  Waste Management

Very weak diversification

The 3 months correlation between Axway and Waste is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Axway Software SA and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 SA are associated (or correlated) with Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Axway Software i.e., Axway Software and Waste Management go up and down completely randomly.

Pair Corralation between Axway Software and Waste Management

Assuming the 90 days trading horizon Axway Software SA is expected to generate 1.11 times more return on investment than Waste Management. However, Axway Software is 1.11 times more volatile than Waste Management. It trades about -0.16 of its potential returns per unit of risk. Waste Management is currently generating about -0.59 per unit of risk. If you would invest  2,740  in Axway Software SA on October 9, 2024 and sell it today you would lose (60.00) from holding Axway Software SA or give up 2.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.47%
Values	Daily Returns

Axway Software SA  vs.  Waste Management

Axway Software SA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Axway Software SA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Axway Software may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Waste Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Waste Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Waste Management is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Axway Software and Waste Management

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

The idea behind Axway Software SA and Waste Management 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.