Correlation Between Absolute Software and Dave

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

Diversification Opportunities for Absolute Software and Dave

  Correlation Coefficient

Very good diversification

The 3 months correlation between Absolute and Dave is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Absolute Software and Dave Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dave Inc and Absolute 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 Absolute Software are associated (or correlated) with Dave. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dave Inc has no effect on the direction of Absolute Software i.e., Absolute Software and Dave go up and down completely randomly.

Pair Corralation between Absolute Software and Dave

Given the investment horizon of 90 days Absolute Software is expected to generate 0.95 times more return on investment than Dave. However, Absolute Software is 1.05 times less risky than Dave. It trades about 0.05 of its potential returns per unit of risk. Dave Inc is currently generating about -0.13 per unit of risk. If you would invest  949.00  in Absolute Software on March 3, 2023 and sell it today you would earn a total of  163.00  from holding Absolute Software or generate 17.18% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
ValuesDaily Returns

Absolute Software  vs.  Dave Inc

 Performance (%) 
Absolute Software 

Absolute Performance

8 of 100

Compared to the overall equity markets, risk-adjusted returns on investments in Absolute Software are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Absolute Software unveiled solid returns over the last few months and may actually be approaching a breakup point.
Dave Inc 

Dave Performance

0 of 100

Over the last 90 days Dave Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in July 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Absolute Software and Dave Volatility Contrast

   Predicted Return Density   

Pair Trading with Absolute Software and Dave

The main advantage of trading using opposite Absolute Software and Dave positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Absolute Software position performs unexpectedly, Dave 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 Dave will offset losses from the drop in Dave's long position.
The idea behind Absolute Software and Dave 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.
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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