Correlation Between ACI Worldwide and Arbe Robotics

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

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

Diversification Opportunities for ACI Worldwide and Arbe Robotics

-0.08

Correlation Coefficient

ACI Worldwide  Arbe Robotics

Good diversification

The 3 months correlation between ACI and Arbe is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding ACI Worldwide and Arbe Robotics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arbe Robotics and ACI Worldwide 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 ACI Worldwide are associated (or correlated) with Arbe Robotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arbe Robotics has no effect on the direction of ACI Worldwide i.e., ACI Worldwide and Arbe Robotics go up and down completely randomly.

Pair Corralation between ACI Worldwide and Arbe Robotics

Given the investment horizon of 90 days ACI Worldwide is expected to generate 0.18 times more return on investment than Arbe Robotics. However, ACI Worldwide is 5.5 times less risky than Arbe Robotics. It trades about 0.05 of its potential returns per unit of risk. Arbe Robotics is currently generating about -0.01 per unit of risk. If you would invest  5,290  in ACI Worldwide on December 26, 2024 and sell it today you would earn a total of  236.00  from holding ACI Worldwide or generate 4.46% return on investment over 90 days.

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

ACI Worldwide  vs.  Arbe Robotics

ACI Worldwide

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ACI Worldwide are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, ACI Worldwide is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Arbe Robotics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Arbe Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental drivers remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with ACI Worldwide and Arbe Robotics

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

The idea behind ACI Worldwide and Arbe Robotics 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.