Correlation Between Alkami Technology and Meridianlink

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

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

Diversification Opportunities for Alkami Technology and Meridianlink

0.01

Correlation Coefficient

Alkami Technology  Meridianlink

Significant diversification

The 3 months correlation between Alkami and Meridianlink is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Alkami Technology and Meridianlink in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Meridianlink and Alkami Technology 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 Alkami Technology are associated (or correlated) with Meridianlink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Meridianlink has no effect on the direction of Alkami Technology i.e., Alkami Technology and Meridianlink go up and down completely randomly.

Pair Corralation between Alkami Technology and Meridianlink

Given the investment horizon of 90 days Alkami Technology is expected to generate 1.14 times more return on investment than Meridianlink. However, Alkami Technology is 1.14 times more volatile than Meridianlink. It trades about 0.15 of its potential returns per unit of risk. Meridianlink is currently generating about 0.03 per unit of risk. If you would invest  3,171  in Alkami Technology on September 3, 2024 and sell it today you would earn a total of  776.00  from holding Alkami Technology or generate 24.47% return on investment over 90 days.

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

Alkami Technology  vs.  Meridianlink

Alkami Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alkami Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward-looking signals, Alkami Technology unveiled solid returns over the last few months and may actually be approaching a breakup point.

Meridianlink

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Meridianlink are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Meridianlink is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Alkami Technology and Meridianlink

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

The idea behind Alkami Technology and Meridianlink 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.