Correlation Between Alkami Technology and PLAIDInc

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

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

Diversification Opportunities for Alkami Technology and PLAIDInc

0.0

Correlation Coefficient

Alkami Technology  PLAIDInc

Pay attention - limited upside

The 3 months correlation between Alkami and PLAIDInc is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alkami Technology and PLAIDInc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLAIDInc 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 PLAIDInc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLAIDInc has no effect on the direction of Alkami Technology i.e., Alkami Technology and PLAIDInc go up and down completely randomly.

Pair Corralation between Alkami Technology and PLAIDInc

Given the investment horizon of 90 days Alkami Technology is expected to generate 1.15 times more return on investment than PLAIDInc. However, Alkami Technology is 1.15 times more volatile than PLAIDInc. It trades about 0.09 of its potential returns per unit of risk. PLAIDInc is currently generating about 0.07 per unit of risk. If you would invest  2,249  in Alkami Technology on October 3, 2024 and sell it today you would earn a total of  1,419  from holding Alkami Technology or generate 63.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.63%
Values	Daily Returns

Alkami Technology  vs.  PLAIDInc

Alkami Technology

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Alkami Technology are ranked lower than 7 (%) 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.

PLAIDInc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PLAIDInc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal forward indicators, PLAIDInc reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alkami Technology and PLAIDInc

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

The idea behind Alkami Technology and PLAIDInc 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.