Correlation Between Five9 and Rekor Systems

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

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

Diversification Opportunities for Five9 and Rekor Systems

-0.77

Correlation Coefficient

Five9  Rekor Systems

Pay attention - limited upside

The 3 months correlation between Five9 and Rekor is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Five9 Inc and Rekor Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rekor Systems and Five9 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 Five9 Inc are associated (or correlated) with Rekor Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rekor Systems has no effect on the direction of Five9 i.e., Five9 and Rekor Systems go up and down completely randomly.

Pair Corralation between Five9 and Rekor Systems

Given the investment horizon of 90 days Five9 Inc is expected to generate 0.58 times more return on investment than Rekor Systems. However, Five9 Inc is 1.71 times less risky than Rekor Systems. It trades about 0.25 of its potential returns per unit of risk. Rekor Systems is currently generating about -0.1 per unit of risk. If you would invest  2,783  in Five9 Inc on September 12, 2024 and sell it today you would earn a total of  1,441  from holding Five9 Inc or generate 51.78% return on investment over 90 days.

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

Five9 Inc  vs.  Rekor Systems

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.

Rekor Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rekor Systems has generated negative risk-adjusted returns adding no value to investors with long positions. Even with fragile performance in the last few months, the Stock's forward-looking signals remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Five9 and Rekor Systems

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

The idea behind Five9 Inc and Rekor Systems 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.