Correlation Between Workiva and StoneCoLtd
Can any of the company-specific risk be diversified away by investing in both Workiva and StoneCoLtd 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 Workiva and StoneCoLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Workiva and StoneCoLtd, you can compare the effects of market volatilities on Workiva and StoneCoLtd 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 Workiva with a short position of StoneCoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workiva and StoneCoLtd.
Diversification Opportunities for Workiva and StoneCoLtd
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Workiva and StoneCoLtd is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and StoneCoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on StoneCoLtd and Workiva 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 Workiva are associated (or correlated) with StoneCoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of StoneCoLtd has no effect on the direction of Workiva i.e., Workiva and StoneCoLtd go up and down completely randomly.
Pair Corralation between Workiva and StoneCoLtd
Allowing for the 90-day total investment horizon Workiva is expected to under-perform the StoneCoLtd. But the stock apears to be less risky and, when comparing its historical volatility, Workiva is 1.17 times less risky than StoneCoLtd. The stock trades about -0.07 of its potential returns per unit of risk. The StoneCoLtd is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,226 in StoneCoLtd on December 29, 2023 and sell it today you would earn a total of 435.00 from holding StoneCoLtd or generate 35.48% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Workiva vs. StoneCoLtd
Performance |
Timeline |
Workiva |
StoneCoLtd |
Workiva and StoneCoLtd Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Workiva and StoneCoLtd
The main advantage of trading using opposite Workiva and StoneCoLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Workiva position performs unexpectedly, StoneCoLtd 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 StoneCoLtd will offset losses from the drop in StoneCoLtd's long position.Workiva vs. Kingsoft Cloud HoldingsLtd | Workiva vs. C3 Ai Inc | Workiva vs. Eventbrite Class A | Workiva vs. Daily Journal Corp |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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