Correlation Between Robinhood Markets and AvidXchange Holdings
Can any of the company-specific risk be diversified away by investing in both Robinhood Markets and AvidXchange Holdings 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 Robinhood Markets and AvidXchange Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Robinhood Markets and AvidXchange Holdings, you can compare the effects of market volatilities on Robinhood Markets and AvidXchange Holdings 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 Robinhood Markets with a short position of AvidXchange Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robinhood Markets and AvidXchange Holdings.
Diversification Opportunities for Robinhood Markets and AvidXchange Holdings
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Robinhood and AvidXchange is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Robinhood Markets and AvidXchange Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AvidXchange Holdings and Robinhood Markets 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 Robinhood Markets are associated (or correlated) with AvidXchange Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AvidXchange Holdings has no effect on the direction of Robinhood Markets i.e., Robinhood Markets and AvidXchange Holdings go up and down completely randomly.
Pair Corralation between Robinhood Markets and AvidXchange Holdings
Given the investment horizon of 90 days Robinhood Markets is expected to generate 1.41 times more return on investment than AvidXchange Holdings. However, Robinhood Markets is 1.41 times more volatile than AvidXchange Holdings. It trades about 0.14 of its potential returns per unit of risk. AvidXchange Holdings is currently generating about -0.02 per unit of risk. If you would invest 1,448 in Robinhood Markets on January 24, 2024 and sell it today you would earn a total of 271.00 from holding Robinhood Markets or generate 18.72% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Robinhood Markets vs. AvidXchange Holdings
Performance |
Timeline |
Robinhood Markets |
AvidXchange Holdings |
Robinhood Markets and AvidXchange Holdings Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Robinhood Markets and AvidXchange Holdings
The main advantage of trading using opposite Robinhood Markets and AvidXchange Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Robinhood Markets position performs unexpectedly, AvidXchange Holdings 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 AvidXchange Holdings will offset losses from the drop in AvidXchange Holdings' long position.Robinhood Markets vs. Raymond James Financial | Robinhood Markets vs. PJT Partners | Robinhood Markets vs. Moelis Co | Robinhood Markets vs. LPL Financial Holdings |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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