Correlation Between Aspen Technology and Pacific Funds

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

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

Diversification Opportunities for Aspen Technology and Pacific Funds

0.51

Correlation Coefficient

Aspen Technology  Pacific Funds

Very weak diversification

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

Pair Corralation between Aspen Technology and Pacific Funds

Given the investment horizon of 90 days Aspen Technology is expected to generate 12.34 times more return on investment than Pacific Funds. However, Aspen Technology is 12.34 times more volatile than Pacific Funds Floating. It trades about 0.01 of its potential returns per unit of risk. Pacific Funds Floating is currently generating about 0.16 per unit of risk. If you would invest  19,349  in Aspen Technology on January 20, 2024 and sell it today you would earn a total of  310.00  from holding Aspen Technology or generate 1.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

Aspen Technology  vs.  Pacific Funds Floating

Aspen Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pacific Funds Floating

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Funds Floating are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pacific Funds is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aspen Technology and Pacific Funds

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

The idea behind Aspen Technology and Pacific Funds Floating 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 Stocks Directory module to find actively traded stocks across global markets.