Correlation Between BASE and MondayCom

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

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

Diversification Opportunities for BASE and MondayCom

-0.66

Correlation Coefficient

BASE  MondayCom

Excellent diversification

The 3 months correlation between BASE and MondayCom is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding BASE Inc and MondayCom in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MondayCom and BASE 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 BASE Inc are associated (or correlated) with MondayCom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MondayCom has no effect on the direction of BASE i.e., BASE and MondayCom go up and down completely randomly.

Pair Corralation between BASE and MondayCom

Assuming the 90 days horizon BASE is expected to generate 1.11 times less return on investment than MondayCom. In addition to that, BASE is 1.33 times more volatile than MondayCom. It trades about 0.03 of its total potential returns per unit of risk. MondayCom is currently generating about 0.05 per unit of volatility. If you would invest  17,985  in MondayCom on September 23, 2024 and sell it today you would earn a total of  6,264  from holding MondayCom or generate 34.83% return on investment over 90 days.

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

BASE Inc  vs.  MondayCom

BASE Inc

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BASE Inc are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, BASE reported solid returns over the last few months and may actually be approaching a breakup point.

MondayCom

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MondayCom has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental 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 BASE and MondayCom

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

The idea behind BASE Inc and MondayCom 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.