Correlation Between Aspen Technology and BOND FUND

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

Diversification Opportunities for Aspen Technology and BOND FUND

-0.74
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Aspen and BFAFX is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Technology and BOND FUND OF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BOND FUND 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 BOND FUND. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BOND FUND has no effect on the direction of Aspen Technology i.e., Aspen Technology and BOND FUND go up and down completely randomly.

Pair Corralation between Aspen Technology and BOND FUND

Given the investment horizon of 90 days Aspen Technology is expected to generate 5.07 times more return on investment than BOND FUND. However, Aspen Technology is 5.07 times more volatile than BOND FUND OF. It trades about 0.05 of its potential returns per unit of risk. BOND FUND OF is currently generating about -0.07 per unit of risk. If you would invest  20,170  in Aspen Technology on September 1, 2022 and sell it today you would earn a total of  2,880  from holding Aspen Technology or generate 14.28% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Aspen Technology  vs.  BOND FUND OF

 Performance (%) 
       Timeline  
Aspen Technology 
Aspen Performance
6 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aspen Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite sluggish basic indicators, Aspen Technology may actually be approaching a critical reversion point that can send shares even higher in December 2022.

Aspen Price Channel

BOND FUND 
BFAFX Performance
0 of 100
Over the last 90 days BOND FUND OF has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, BOND FUND is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

BFAFX Price Channel

Aspen Technology and BOND FUND Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Aspen Technology and BOND FUND

The main advantage of trading using opposite Aspen Technology and BOND FUND positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Technology position performs unexpectedly, BOND FUND 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 BOND FUND will offset losses from the drop in BOND FUND's long position.
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The idea behind Aspen Technology and BOND FUND OF 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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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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