Correlation Between ACI Worldwide and CommVault Systems

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

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

Diversification Opportunities for ACI Worldwide and CommVault Systems

0.83

Correlation Coefficient

ACI Worldwide  CommVault Systems

Very poor diversification

The 3 months correlation between ACI and CommVault is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding ACI Worldwide and CommVault Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CommVault Systems 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 CommVault Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CommVault Systems has no effect on the direction of ACI Worldwide i.e., ACI Worldwide and CommVault Systems go up and down completely randomly.

Pair Corralation between ACI Worldwide and CommVault Systems

Given the investment horizon of 90 days ACI Worldwide is expected to generate 1.02 times less return on investment than CommVault Systems. But when comparing it to its historical volatility, ACI Worldwide is 1.86 times less risky than CommVault Systems. It trades about 0.13 of its potential returns per unit of risk. CommVault Systems is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  14,892  in CommVault Systems on September 4, 2024 and sell it today you would earn a total of  2,147  from holding CommVault Systems or generate 14.42% return on investment over 90 days.

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

ACI Worldwide  vs.  CommVault Systems

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.

CommVault Systems

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CommVault Systems are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal essential indicators, CommVault Systems unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ACI Worldwide and CommVault Systems

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

The idea behind ACI Worldwide and CommVault Systems 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.