Correlation Between ACI Worldwide and Insight Enterprises

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

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

Diversification Opportunities for ACI Worldwide and Insight Enterprises

-0.72

Correlation Coefficient

ACI Worldwide  Insight Enterprises

Pay attention - limited upside

The 3 months correlation between ACI and Insight is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding ACI Worldwide and Insight Enterprises in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insight Enterprises 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 Insight Enterprises. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insight Enterprises has no effect on the direction of ACI Worldwide i.e., ACI Worldwide and Insight Enterprises go up and down completely randomly.

Pair Corralation between ACI Worldwide and Insight Enterprises

Given the investment horizon of 90 days ACI Worldwide is expected to generate 1.16 times more return on investment than Insight Enterprises. However, ACI Worldwide is 1.16 times more volatile than Insight Enterprises. It trades about 0.1 of its potential returns per unit of risk. Insight Enterprises is currently generating about 0.06 per unit of risk. If you would invest  2,108  in ACI Worldwide on September 4, 2024 and sell it today you would earn a total of  3,544  from holding ACI Worldwide or generate 168.12% return on investment over 90 days.

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

ACI Worldwide  vs.  Insight Enterprises

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.

Insight Enterprises

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Insight Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with ACI Worldwide and Insight Enterprises

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

The idea behind ACI Worldwide and Insight Enterprises 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.