Correlation Between Model N and Alkami Technology

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

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

Diversification Opportunities for Model N and Alkami Technology

-0.12

Correlation Coefficient

Model N  Alkami Technology

Good diversification

The 3 months correlation between Model and Alkami is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Model N and Alkami Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alkami Technology and Model N 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 Model N are associated (or correlated) with Alkami Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alkami Technology has no effect on the direction of Model N i.e., Model N and Alkami Technology go up and down completely randomly.

Pair Corralation between Model N and Alkami Technology

Given the investment horizon of 90 days Model N is expected to generate 1.18 times more return on investment than Alkami Technology. However, Model N is 1.18 times more volatile than Alkami Technology. It trades about 0.07 of its potential returns per unit of risk. Alkami Technology is currently generating about 0.0 per unit of risk. If you would invest  2,758  in Model N on February 2, 2024 and sell it today you would earn a total of  212.00  from holding Model N or generate 7.69% return on investment over 90 days.

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

Model N  vs.  Alkami Technology

Model N

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Model N are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Model N may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Alkami Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alkami Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Alkami Technology is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Model N and Alkami Technology

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

The idea behind Model N and Alkami Technology 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.

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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.