Correlation Between Couchbase and Secureworks Corp

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

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

Diversification Opportunities for Couchbase and Secureworks Corp

0.56

Correlation Coefficient

Couchbase  Secureworks Corp

Very weak diversification

The 3 months correlation between Couchbase and Secureworks is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Couchbase and Secureworks Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Secureworks Corp and Couchbase 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 Couchbase are associated (or correlated) with Secureworks Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Secureworks Corp has no effect on the direction of Couchbase i.e., Couchbase and Secureworks Corp go up and down completely randomly.

Pair Corralation between Couchbase and Secureworks Corp

Given the investment horizon of 90 days Couchbase is expected to generate 1.33 times more return on investment than Secureworks Corp. However, Couchbase is 1.33 times more volatile than Secureworks Corp. It trades about 0.07 of its potential returns per unit of risk. Secureworks Corp is currently generating about 0.04 per unit of risk. If you would invest  1,419  in Couchbase on September 14, 2024 and sell it today you would earn a total of  196.00  from holding Couchbase or generate 13.81% return on investment over 90 days.

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

Couchbase  vs.  Secureworks Corp

Couchbase

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Couchbase are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Couchbase exhibited solid returns over the last few months and may actually be approaching a breakup point.

Secureworks Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Secureworks Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Secureworks Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Couchbase and Secureworks Corp

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

The idea behind Couchbase and Secureworks Corp 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.