Correlation Between AvidXchange Holdings and Informatica

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

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

Diversification Opportunities for AvidXchange Holdings and Informatica

0.32

Correlation Coefficient

AvidXchange Holdings  Informatica

Weak diversification

The 3 months correlation between AvidXchange and Informatica is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding AvidXchange Holdings and Informatica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informatica 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 Informatica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informatica has no effect on the direction of AvidXchange Holdings i.e., AvidXchange Holdings and Informatica go up and down completely randomly.

Pair Corralation between AvidXchange Holdings and Informatica

Given the investment horizon of 90 days AvidXchange Holdings is expected to generate 2.11 times less return on investment than Informatica. In addition to that, AvidXchange Holdings is 1.23 times more volatile than Informatica. It trades about 0.02 of its total potential returns per unit of risk. Informatica is currently generating about 0.05 per unit of volatility. If you would invest  1,629  in Informatica on September 20, 2024 and sell it today you would earn a total of  991.00  from holding Informatica or generate 60.83% return on investment over 90 days.

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

AvidXchange Holdings  vs.  Informatica

AvidXchange Holdings

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AvidXchange Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady fundamental indicators, AvidXchange Holdings showed solid returns over the last few months and may actually be approaching a breakup point.

Informatica

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Informatica are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Informatica is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with AvidXchange Holdings and Informatica

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

The idea behind AvidXchange Holdings and Informatica 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.