Correlation Between AGF Management and Guidewire Software

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

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

Diversification Opportunities for AGF Management and Guidewire Software

0.63

Correlation Coefficient

AGF Management  Guidewire Software

Poor diversification

The 3 months correlation between AGF and Guidewire is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding AGF Management Limited and Guidewire Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guidewire Software and AGF Management 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 AGF Management Limited are associated (or correlated) with Guidewire Software. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guidewire Software has no effect on the direction of AGF Management i.e., AGF Management and Guidewire Software go up and down completely randomly.

Pair Corralation between AGF Management and Guidewire Software

Assuming the 90 days horizon AGF Management Limited is expected to generate 0.89 times more return on investment than Guidewire Software. However, AGF Management Limited is 1.13 times less risky than Guidewire Software. It trades about 0.18 of its potential returns per unit of risk. Guidewire Software is currently generating about 0.08 per unit of risk. If you would invest  599.00  in AGF Management Limited on April 24, 2025 and sell it today you would earn a total of  156.00  from holding AGF Management Limited or generate 26.04% return on investment over 90 days.

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

AGF Management Limited  vs.  Guidewire Software

AGF Management

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AGF Management Limited are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, AGF Management reported solid returns over the last few months and may actually be approaching a breakup point.

Guidewire Software

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guidewire Software are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Guidewire Software unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AGF Management and Guidewire Software

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

The idea behind AGF Management Limited and Guidewire Software 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.