Correlation Between Amdocs and Loews Corp

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Can any of the company-specific risk be diversified away by investing in both Amdocs and Loews Corp 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 Amdocs and Loews Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amdocs and Loews Corp, you can compare the effects of market volatilities on Amdocs and Loews Corp 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 Amdocs with a short position of Loews Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amdocs and Loews Corp.

Diversification Opportunities for Amdocs and Loews Corp

0.55
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Amdocs and Loews is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Amdocs and Loews Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loews Corp and Amdocs 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 Amdocs are associated (or correlated) with Loews Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loews Corp has no effect on the direction of Amdocs i.e., Amdocs and Loews Corp go up and down completely randomly.

Pair Corralation between Amdocs and Loews Corp

Considering the 90-day investment horizon Amdocs is expected to generate 1.18 times less return on investment than Loews Corp. But when comparing it to its historical volatility, Amdocs is 1.01 times less risky than Loews Corp. It trades about 0.04 of its potential returns per unit of risk. Loews Corp is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  6,258  in Loews Corp on December 30, 2023 and sell it today you would earn a total of  1,571  from holding Loews Corp or generate 25.1% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Amdocs  vs.  Loews Corp

 Performance 
       Timeline  
Amdocs 

Risk-Adjusted Performance

4 of 100

 
Low
 
High
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Amdocs are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Amdocs is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Loews Corp 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Loews Corp are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain essential indicators, Loews Corp may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Amdocs and Loews Corp Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Amdocs and Loews Corp

The main advantage of trading using opposite Amdocs and Loews Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amdocs position performs unexpectedly, Loews Corp 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 Loews Corp will offset losses from the drop in Loews Corp's long position.
The idea behind Amdocs and Loews Corp 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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