Correlation Between Aspen Technology and Marketwise

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

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

Diversification Opportunities for Aspen Technology and Marketwise

-0.51

Correlation Coefficient

Aspen Technology  Marketwise

Excellent diversification

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

Pair Corralation between Aspen Technology and Marketwise

Given the investment horizon of 90 days Aspen Technology is expected to generate 0.12 times more return on investment than Marketwise. However, Aspen Technology is 8.1 times less risky than Marketwise. It trades about 0.2 of its potential returns per unit of risk. Marketwise is currently generating about 0.02 per unit of risk. If you would invest  23,197  in Aspen Technology on October 23, 2024 and sell it today you would earn a total of  2,358  from holding Aspen Technology or generate 10.17% return on investment over 90 days.

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

Aspen Technology  vs.  Marketwise

Aspen Technology

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Marketwise

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Marketwise are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Marketwise may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Aspen Technology and Marketwise

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

The idea behind Aspen Technology and Marketwise 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..