Correlation Between Guidewire Software and PTC

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

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

Diversification Opportunities for Guidewire Software and PTC

0.31

Correlation Coefficient

Guidewire Software  PTC

Weak diversification

The 3 months correlation between Guidewire and PTC is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Guidewire Software and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Inc and Guidewire Software 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 Guidewire Software are associated (or correlated) with PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of Guidewire Software i.e., Guidewire Software and PTC go up and down completely randomly.

Pair Corralation between Guidewire Software and PTC

Given the investment horizon of 90 days Guidewire Software is expected to generate 1.64 times more return on investment than PTC. However, Guidewire Software is 1.64 times more volatile than PTC Inc. It trades about 0.09 of its potential returns per unit of risk. PTC Inc is currently generating about 0.06 per unit of risk. If you would invest  7,444  in Guidewire Software on October 3, 2024 and sell it today you would earn a total of  9,414  from holding Guidewire Software or generate 126.46% return on investment over 90 days.

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

Guidewire Software  vs.  PTC Inc

Guidewire Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guidewire Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

PTC Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, PTC is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Guidewire Software and PTC

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

The idea behind Guidewire Software and PTC Inc 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.