Correlation Between AvidXchange Holdings and Consensus Cloud

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

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

Diversification Opportunities for AvidXchange Holdings and Consensus Cloud

-0.16

Correlation Coefficient

AvidXchange Holdings  Consensus Cloud

Good diversification

The 3 months correlation between AvidXchange and Consensus is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding AvidXchange Holdings and Consensus Cloud Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consensus Cloud Solutions and AvidXchange Holdings 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 AvidXchange Holdings are associated (or correlated) with Consensus Cloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consensus Cloud Solutions has no effect on the direction of AvidXchange Holdings i.e., AvidXchange Holdings and Consensus Cloud go up and down completely randomly.

Pair Corralation between AvidXchange Holdings and Consensus Cloud

Given the investment horizon of 90 days AvidXchange Holdings is expected to under-perform the Consensus Cloud. In addition to that, AvidXchange Holdings is 1.15 times more volatile than Consensus Cloud Solutions. It trades about -0.19 of its total potential returns per unit of risk. Consensus Cloud Solutions is currently generating about 0.03 per unit of volatility. If you would invest  2,546  in Consensus Cloud Solutions on December 1, 2024 and sell it today you would earn a total of  71.00  from holding Consensus Cloud Solutions or generate 2.79% return on investment over 90 days.

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

AvidXchange Holdings  vs.  Consensus Cloud Solutions

AvidXchange Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days AvidXchange Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Consensus Cloud Solutions

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Consensus Cloud Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Consensus Cloud is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with AvidXchange Holdings and Consensus Cloud

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

The idea behind AvidXchange Holdings and Consensus Cloud Solutions 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.