Correlation Between Sapiens International and 26442CAB0

Can any of the company-specific risk be diversified away by investing in both Sapiens International and 26442CAB0 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 Sapiens International and 26442CAB0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sapiens International and DUKE ENERGY CAROLINAS, you can compare the effects of market volatilities on Sapiens International and 26442CAB0 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 Sapiens International with a short position of 26442CAB0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sapiens International and 26442CAB0.

Diversification Opportunities for Sapiens International and 26442CAB0

0.67

Correlation Coefficient

Sapiens International  26442CAB0

Poor diversification

The 3 months correlation between Sapiens and 26442CAB0 is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Sapiens International and DUKE ENERGY CAROLINAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DUKE ENERGY CAROLINAS and Sapiens International 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 Sapiens International are associated (or correlated) with 26442CAB0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DUKE ENERGY CAROLINAS has no effect on the direction of Sapiens International i.e., Sapiens International and 26442CAB0 go up and down completely randomly.

Pair Corralation between Sapiens International and 26442CAB0

Given the investment horizon of 90 days Sapiens International is expected to under-perform the 26442CAB0. In addition to that, Sapiens International is 1.08 times more volatile than DUKE ENERGY CAROLINAS. It trades about -0.28 of its total potential returns per unit of risk. DUKE ENERGY CAROLINAS is currently generating about -0.2 per unit of volatility. If you would invest  10,773  in DUKE ENERGY CAROLINAS on October 8, 2024 and sell it today you would lose (441.00) from holding DUKE ENERGY CAROLINAS or give up 4.09% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	84.21%
Values	Daily Returns

Sapiens International  vs.  DUKE ENERGY CAROLINAS

Sapiens International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sapiens International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

DUKE ENERGY CAROLINAS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DUKE ENERGY CAROLINAS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 26442CAB0 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Sapiens International and 26442CAB0

The main advantage of trading using opposite Sapiens International and 26442CAB0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sapiens International position performs unexpectedly, 26442CAB0 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 26442CAB0 will offset losses from the drop in 26442CAB0's long position.

The idea behind Sapiens International and DUKE ENERGY CAROLINAS 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.