Correlation Between Elastic NV and Smartsheet

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

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

Diversification Opportunities for Elastic NV and Smartsheet

0.78

Correlation Coefficient

Elastic NV  Smartsheet

Poor diversification

The 3 months correlation between Elastic and Smartsheet is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Elastic NV and Smartsheet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smartsheet and Elastic NV 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 Elastic NV are associated (or correlated) with Smartsheet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smartsheet has no effect on the direction of Elastic NV i.e., Elastic NV and Smartsheet go up and down completely randomly.

Pair Corralation between Elastic NV and Smartsheet

Given the investment horizon of 90 days Elastic NV is expected to under-perform the Smartsheet. In addition to that, Elastic NV is 1.33 times more volatile than Smartsheet. It trades about -0.07 of its total potential returns per unit of risk. Smartsheet is currently generating about -0.02 per unit of volatility. If you would invest  4,355  in Smartsheet on February 18, 2024 and sell it today you would lose (161.00) from holding Smartsheet or give up 3.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Elastic NV  vs.  Smartsheet

Elastic NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Elastic NV 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Smartsheet

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smartsheet has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Smartsheet is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Elastic NV and Smartsheet

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

The idea behind Elastic NV and Smartsheet 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.