Correlation Between Excel Corp and Synopsys

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

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

Diversification Opportunities for Excel Corp and Synopsys

0.44

Correlation Coefficient

Excel Corp  Synopsys

Very weak diversification

The 3 months correlation between Excel and Synopsys is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Excel Corp and Synopsys in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Synopsys and Excel Corp 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 Excel Corp are associated (or correlated) with Synopsys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Synopsys has no effect on the direction of Excel Corp i.e., Excel Corp and Synopsys go up and down completely randomly.

Pair Corralation between Excel Corp and Synopsys

Given the investment horizon of 90 days Excel Corp is expected to generate 159.86 times more return on investment than Synopsys. However, Excel Corp is 159.86 times more volatile than Synopsys. It trades about 0.19 of its potential returns per unit of risk. Synopsys is currently generating about -0.35 per unit of risk. If you would invest  0.01  in Excel Corp on January 25, 2024 and sell it today you would earn a total of  0.00  from holding Excel Corp or generate 0.0% return on investment over 90 days.

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

Excel Corp  vs.  Synopsys

Excel Corp

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Excel Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Excel Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Synopsys

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Synopsys has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Synopsys is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Excel Corp and Synopsys

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

The idea behind Excel Corp and Synopsys 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..