Correlation Between Domo and Elastic NV

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

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

Diversification Opportunities for Domo and Elastic NV

0.69

Correlation Coefficient

Domo  Elastic NV

Poor diversification

The 3 months correlation between Domo and Elastic is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Domo Inc and Elastic NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elastic NV and Domo 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 Domo Inc are associated (or correlated) with Elastic NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elastic NV has no effect on the direction of Domo i.e., Domo and Elastic NV go up and down completely randomly.

Pair Corralation between Domo and Elastic NV

Given the investment horizon of 90 days Domo is expected to generate 1.62 times less return on investment than Elastic NV. In addition to that, Domo is 1.05 times more volatile than Elastic NV. It trades about 0.14 of its total potential returns per unit of risk. Elastic NV is currently generating about 0.23 per unit of volatility. If you would invest  7,619  in Elastic NV on August 30, 2024 and sell it today you would earn a total of  3,394  from holding Elastic NV or generate 44.55% return on investment over 90 days.

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

Domo Inc  vs.  Elastic NV

Domo Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Domo Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain primary indicators, Domo displayed solid returns over the last few months and may actually be approaching a breakup point.

Elastic NV

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Elastic NV are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Elastic NV exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Domo and Elastic NV

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

The idea behind Domo Inc and Elastic NV 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.