Correlation Between Aware and Marin Software

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

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

Diversification Opportunities for Aware and Marin Software

0.51

Correlation Coefficient

Aware  Marin Software

Very weak diversification

The 3 months correlation between Aware and Marin is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Aware Inc and Marin Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marin Software 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 Marin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marin Software has no effect on the direction of Aware i.e., Aware and Marin Software go up and down completely randomly.

Pair Corralation between Aware and Marin Software

Given the investment horizon of 90 days Aware Inc is expected to generate 0.54 times more return on investment than Marin Software. However, Aware Inc is 1.84 times less risky than Marin Software. It trades about 0.02 of its potential returns per unit of risk. Marin Software is currently generating about 0.0 per unit of risk. If you would invest  172.00  in Aware Inc on October 11, 2024 and sell it today you would lose (15.00) from holding Aware Inc or give up 8.72% of portfolio value over 90 days.

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

Aware Inc  vs.  Marin Software

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 February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Marin Software

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marin Software are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, Marin Software is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Aware and Marin Software

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

The idea behind Aware Inc and Marin Software 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.