Correlation Between EngageSmart LLC and AvidXchange Holdings

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

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

Diversification Opportunities for EngageSmart LLC and AvidXchange Holdings

0.0

Correlation Coefficient

EngageSmart LLC  AvidXchange Holdings

Pay attention - limited upside

The 3 months correlation between EngageSmart and AvidXchange is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding EngageSmart LLC and AvidXchange Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvidXchange Holdings and EngageSmart LLC 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 EngageSmart LLC are associated (or correlated) with AvidXchange Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvidXchange Holdings has no effect on the direction of EngageSmart LLC i.e., EngageSmart LLC and AvidXchange Holdings go up and down completely randomly.

Pair Corralation between EngageSmart LLC and AvidXchange Holdings

If you would invest (100.00) in EngageSmart LLC on December 1, 2024 and sell it today you would earn a total of  100.00  from holding EngageSmart LLC or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

EngageSmart LLC  vs.  AvidXchange Holdings

EngageSmart LLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days EngageSmart LLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, EngageSmart LLC is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

AvidXchange Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days AvidXchange Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with EngageSmart LLC and AvidXchange Holdings

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

The idea behind EngageSmart LLC and AvidXchange Holdings 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..