Correlation Between Cognyte Software and Tenable Holdings

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

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

Diversification Opportunities for Cognyte Software and Tenable Holdings

0.55

Correlation Coefficient

Cognyte Software  Tenable Holdings

Very weak diversification

The 3 months correlation between Cognyte and Tenable is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Cognyte Software and Tenable Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenable Holdings 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 Tenable Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenable Holdings has no effect on the direction of Cognyte Software i.e., Cognyte Software and Tenable Holdings go up and down completely randomly.

Pair Corralation between Cognyte Software and Tenable Holdings

Given the investment horizon of 90 days Cognyte Software is expected to generate 1.22 times more return on investment than Tenable Holdings. However, Cognyte Software is 1.22 times more volatile than Tenable Holdings. It trades about -0.04 of its potential returns per unit of risk. Tenable Holdings is currently generating about -0.08 per unit of risk. If you would invest  860.00  in Cognyte Software on December 29, 2024 and sell it today you would lose (65.00) from holding Cognyte Software or give up 7.56% 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.  Tenable Holdings

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.

Tenable Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tenable Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic 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 Cognyte Software and Tenable Holdings

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

The idea behind Cognyte Software and Tenable Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.