Correlation Between Consensus Cloud and Five9

Can any of the company-specific risk be diversified away by investing in both Consensus Cloud and Five9 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 Consensus Cloud and Five9 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Consensus Cloud Solutions and Five9 Inc, you can compare the effects of market volatilities on Consensus Cloud and Five9 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 Consensus Cloud with a short position of Five9. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consensus Cloud and Five9.

Diversification Opportunities for Consensus Cloud and Five9

0.73

Correlation Coefficient

Consensus Cloud  Five9

Poor diversification

The 3 months correlation between Consensus and Five9 is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Consensus Cloud Solutions and Five9 Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Five9 Inc and Consensus Cloud 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 Consensus Cloud Solutions are associated (or correlated) with Five9. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Five9 Inc has no effect on the direction of Consensus Cloud i.e., Consensus Cloud and Five9 go up and down completely randomly.

Pair Corralation between Consensus Cloud and Five9

Given the investment horizon of 90 days Consensus Cloud Solutions is expected to under-perform the Five9. But the stock apears to be less risky and, when comparing its historical volatility, Consensus Cloud Solutions is 1.11 times less risky than Five9. The stock trades about -0.24 of its potential returns per unit of risk. The Five9 Inc is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  4,097  in Five9 Inc on September 24, 2024 and sell it today you would earn a total of  151.00  from holding Five9 Inc or generate 3.69% return on investment over 90 days.

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

Consensus Cloud Solutions  vs.  Five9 Inc

Consensus Cloud Solutions

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consensus Cloud Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, Consensus Cloud may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Five9 Inc

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Five9 Inc are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Five9 displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Consensus Cloud and Five9

The main advantage of trading using opposite Consensus Cloud and Five9 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consensus Cloud position performs unexpectedly, Five9 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 Five9 will offset losses from the drop in Five9's long position.

The idea behind Consensus Cloud Solutions and Five9 Inc 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.