Correlation Between Amdocs and Five9

Can any of the company-specific risk be diversified away by investing in both Amdocs and Five9 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 Amdocs and Five9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amdocs and Five9 Inc, you can compare the effects of market volatilities on Amdocs and Five9 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 Amdocs with a short position of Five9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amdocs and Five9.

Diversification Opportunities for Amdocs and Five9

0.37

Correlation Coefficient

Amdocs  Five9

Weak diversification

The 3 months correlation between Amdocs and Five9 is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Amdocs and Five9 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five9 Inc and Amdocs 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 Amdocs are associated (or correlated) with Five9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five9 Inc has no effect on the direction of Amdocs i.e., Amdocs and Five9 go up and down completely randomly.

Pair Corralation between Amdocs and Five9

Considering the 90-day investment horizon Amdocs is expected to generate 0.35 times more return on investment than Five9. However, Amdocs is 2.86 times less risky than Five9. It trades about 0.03 of its potential returns per unit of risk. Five9 Inc is currently generating about -0.01 per unit of risk. If you would invest  7,371  in Amdocs on January 31, 2024 and sell it today you would earn a total of  1,116  from holding Amdocs or generate 15.14% return on investment over 90 days.

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

Amdocs  vs.  Five9 Inc

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.

Five9 Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Five9 Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Amdocs and Five9

The main advantage of trading using opposite Amdocs and Five9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amdocs position performs unexpectedly, Five9 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 Five9 will offset losses from the drop in Five9's long position.

The idea behind Amdocs and Five9 Inc 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.