Correlation Between IDEX Biometrics and Powerschool Holdings

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

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

Diversification Opportunities for IDEX Biometrics and Powerschool Holdings

0.51

Correlation Coefficient

IDEX Biometrics  Powerschool Holdings

Very weak diversification

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

Pair Corralation between IDEX Biometrics and Powerschool Holdings

If you would invest  2,281  in Powerschool Holdings on October 26, 2024 and sell it today you would earn a total of  0.00  from holding Powerschool Holdings or generate 0.0% return on investment over 90 days.

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

IDEX Biometrics ASA  vs.  Powerschool Holdings

IDEX Biometrics ASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IDEX Biometrics ASA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, IDEX Biometrics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Powerschool Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powerschool Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Powerschool Holdings is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IDEX Biometrics and Powerschool Holdings

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

The idea behind IDEX Biometrics ASA and Powerschool 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.