Correlation Between Aware and Everbridge

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

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

Diversification Opportunities for Aware and Everbridge

0.46

Correlation Coefficient

Aware  Everbridge

Very weak diversification

The 3 months correlation between Aware and Everbridge is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Everbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everbridge and Aware 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 Aware Inc are associated (or correlated) with Everbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everbridge has no effect on the direction of Aware i.e., Aware and Everbridge go up and down completely randomly.

Pair Corralation between Aware and Everbridge

Given the investment horizon of 90 days Aware is expected to generate 2.22 times less return on investment than Everbridge. In addition to that, Aware is 1.34 times more volatile than Everbridge. It trades about 0.01 of its total potential returns per unit of risk. Everbridge is currently generating about 0.03 per unit of volatility. If you would invest  2,838  in Everbridge on September 28, 2024 and sell it today you would earn a total of  662.00  from holding Everbridge or generate 23.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	75.0%
Values	Daily Returns

Aware Inc  vs.  Everbridge

Aware Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aware Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Everbridge

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everbridge has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Everbridge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Aware and Everbridge

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

The idea behind Aware Inc and Everbridge 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.