Correlation Between WixCom and Tenable Holdings

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

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

Diversification Opportunities for WixCom and Tenable Holdings

0.43

Correlation Coefficient

WixCom  Tenable Holdings

Very weak diversification

The 3 months correlation between WixCom and Tenable is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding WixCom and Tenable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenable Holdings and WixCom 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 WixCom are associated (or correlated) with Tenable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenable Holdings has no effect on the direction of WixCom i.e., WixCom and Tenable Holdings go up and down completely randomly.

Pair Corralation between WixCom and Tenable Holdings

Considering the 90-day investment horizon WixCom is expected to generate 0.94 times more return on investment than Tenable Holdings. However, WixCom is 1.07 times less risky than Tenable Holdings. It trades about 0.09 of its potential returns per unit of risk. Tenable Holdings is currently generating about -0.07 per unit of risk. If you would invest  12,396  in WixCom on February 13, 2024 and sell it today you would earn a total of  305.00  from holding WixCom or generate 2.46% return on investment over 90 days.

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

WixCom  vs.  Tenable Holdings

WixCom

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WixCom are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, WixCom is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tenable Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenable Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest abnormal 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.

Pair Trading with WixCom and Tenable Holdings

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

The idea behind WixCom and Tenable Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.