Correlation Between Aspen Technology and Expensify

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

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

Diversification Opportunities for Aspen Technology and Expensify

-0.12

Correlation Coefficient

Aspen Technology  Expensify

Good diversification

The 3 months correlation between Aspen and Expensify is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and Expensify in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Expensify and Aspen Technology 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 Aspen Technology are associated (or correlated) with Expensify. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Expensify has no effect on the direction of Aspen Technology i.e., Aspen Technology and Expensify go up and down completely randomly.

Pair Corralation between Aspen Technology and Expensify

Given the investment horizon of 90 days Aspen Technology is expected to generate 0.21 times more return on investment than Expensify. However, Aspen Technology is 4.66 times less risky than Expensify. It trades about 0.14 of its potential returns per unit of risk. Expensify is currently generating about -0.02 per unit of risk. If you would invest  24,895  in Aspen Technology on December 30, 2024 and sell it today you would earn a total of  1,538  from holding Aspen Technology or generate 6.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	80.65%
Values	Daily Returns

Aspen Technology  vs.  Expensify

Aspen Technology

Risk-Adjusted Performance

OK

Over the last 90 days Aspen Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Expensify

Risk-Adjusted Performance

Very Weak

Over the last 90 days Expensify has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Expensify is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aspen Technology and Expensify

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

The idea behind Aspen Technology and Expensify 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.