Correlation Between Shotspotter and Marin Software

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

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

Diversification Opportunities for Shotspotter and Marin Software

0.48

Correlation Coefficient

Shotspotter  Marin Software

Very weak diversification

The 3 months correlation between Shotspotter and Marin is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Shotspotter and Marin Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marin Software and Shotspotter 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 Shotspotter are associated (or correlated) with Marin Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marin Software has no effect on the direction of Shotspotter i.e., Shotspotter and Marin Software go up and down completely randomly.

Pair Corralation between Shotspotter and Marin Software

Given the investment horizon of 90 days Shotspotter is expected to generate 1.54 times more return on investment than Marin Software. However, Shotspotter is 1.54 times more volatile than Marin Software. It trades about 0.04 of its potential returns per unit of risk. Marin Software is currently generating about -0.02 per unit of risk. If you would invest  1,272  in Shotspotter on September 12, 2024 and sell it today you would earn a total of  53.00  from holding Shotspotter or generate 4.17% return on investment over 90 days.

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

Shotspotter  vs.  Marin Software

Shotspotter

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Shotspotter are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, Shotspotter may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Marin Software

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marin Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, Marin Software is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Shotspotter and Marin Software

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

The idea behind Shotspotter and Marin Software 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.