Correlation Between Clearwater Analytics and PROS Holdings

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

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

Diversification Opportunities for Clearwater Analytics and PROS Holdings

0.46

Correlation Coefficient

Clearwater Analytics  PROS Holdings

Very weak diversification

The 3 months correlation between Clearwater and PROS is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Analytics Holdings and PROS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PROS Holdings and Clearwater Analytics 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 Clearwater Analytics Holdings are associated (or correlated) with PROS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PROS Holdings has no effect on the direction of Clearwater Analytics i.e., Clearwater Analytics and PROS Holdings go up and down completely randomly.

Pair Corralation between Clearwater Analytics and PROS Holdings

Given the investment horizon of 90 days Clearwater Analytics Holdings is expected to generate 0.94 times more return on investment than PROS Holdings. However, Clearwater Analytics Holdings is 1.06 times less risky than PROS Holdings. It trades about -0.03 of its potential returns per unit of risk. PROS Holdings is currently generating about -0.04 per unit of risk. If you would invest  2,819  in Clearwater Analytics Holdings on December 21, 2024 and sell it today you would lose (150.00) from holding Clearwater Analytics Holdings or give up 5.32% of portfolio value over 90 days.

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

Clearwater Analytics Holdings  vs.  PROS Holdings

Clearwater Analytics

Risk-Adjusted Performance

Very Weak

Over the last 90 days Clearwater Analytics Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Clearwater Analytics is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

PROS Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days PROS Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Clearwater Analytics and PROS Holdings

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

The idea behind Clearwater Analytics Holdings and PROS 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.