Correlation Between Cognyte Software and Radware

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

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

Diversification Opportunities for Cognyte Software and Radware

0.57

Correlation Coefficient

Cognyte Software  Radware

Very weak diversification

The 3 months correlation between Cognyte and Radware is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Cognyte Software and Radware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radware and Cognyte Software 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 Cognyte Software are associated (or correlated) with Radware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radware has no effect on the direction of Cognyte Software i.e., Cognyte Software and Radware go up and down completely randomly.

Pair Corralation between Cognyte Software and Radware

Given the investment horizon of 90 days Cognyte Software is expected to under-perform the Radware. In addition to that, Cognyte Software is 1.38 times more volatile than Radware. It trades about -0.04 of its total potential returns per unit of risk. Radware is currently generating about -0.02 per unit of volatility. If you would invest  2,281  in Radware on December 29, 2024 and sell it today you would lose (83.00) from holding Radware or give up 3.64% of portfolio value over 90 days.

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

Cognyte Software  vs.  Radware

Cognyte Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cognyte Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Cognyte Software is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Radware

Risk-Adjusted Performance

Very Weak

Over the last 90 days Radware has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Radware is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Cognyte Software and Radware

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

The idea behind Cognyte Software and Radware 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 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.