Correlation Between Box and Amdocs

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

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

Diversification Opportunities for Box and Amdocs

0.26

Correlation Coefficient

Box  Amdocs

Modest diversification

The 3 months correlation between Box and Amdocs is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Box Inc and Amdocs in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amdocs and Box 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 Box Inc are associated (or correlated) with Amdocs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amdocs has no effect on the direction of Box i.e., Box and Amdocs go up and down completely randomly.

Pair Corralation between Box and Amdocs

Considering the 90-day investment horizon Box Inc is expected to generate 1.32 times more return on investment than Amdocs. However, Box is 1.32 times more volatile than Amdocs. It trades about -0.22 of its potential returns per unit of risk. Amdocs is currently generating about -0.34 per unit of risk. If you would invest  2,832  in Box Inc on January 28, 2024 and sell it today you would lose (147.00) from holding Box Inc or give up 5.19% of portfolio value over 90 days.

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

Box Inc  vs.  Amdocs

Box Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Box Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Box is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Amdocs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Amdocs has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Box and Amdocs

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

The idea behind Box Inc and Amdocs 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.