Correlation Between Workiva and Nemetschek

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

By analyzing existing cross correlation between Workiva and Nemetschek AG ON, you can compare the effects of market volatilities on Workiva and Nemetschek 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 Nemetschek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Workiva and Nemetschek.

Diversification Opportunities for Workiva and Nemetschek

0.05

Correlation Coefficient

Workiva  Nemetschek

Significant diversification

The 3 months correlation between Workiva and Nemetschek is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Workiva and Nemetschek AG ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nemetschek AG ON 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 Nemetschek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nemetschek AG ON has no effect on the direction of Workiva i.e., Workiva and Nemetschek go up and down completely randomly.

Pair Corralation between Workiva and Nemetschek

Assuming the 90 days trading horizon Workiva is expected to generate 1.99 times less return on investment than Nemetschek. In addition to that, Workiva is 1.01 times more volatile than Nemetschek AG ON. It trades about 0.04 of its total potential returns per unit of risk. Nemetschek AG ON is currently generating about 0.08 per unit of volatility. If you would invest  4,648  in Nemetschek AG ON on September 22, 2024 and sell it today you would earn a total of  4,677  from holding Nemetschek AG ON or generate 100.62% return on investment over 90 days.

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

Workiva  vs.  Nemetschek AG ON

Workiva

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Workiva are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward-looking signals, Workiva reported solid returns over the last few months and may actually be approaching a breakup point.

Nemetschek AG ON

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nemetschek AG ON are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Nemetschek is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Workiva and Nemetschek

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

The idea behind Workiva and Nemetschek AG ON 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.