Correlation Between Manhattan Associates and Pegasystems

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

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

Diversification Opportunities for Manhattan Associates and Pegasystems

0.28

Correlation Coefficient

Manhattan Associates  Pegasystems

Modest diversification

The 3 months correlation between Manhattan and Pegasystems is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Manhattan Associates and Pegasystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pegasystems and Manhattan Associates 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 Manhattan Associates are associated (or correlated) with Pegasystems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pegasystems has no effect on the direction of Manhattan Associates i.e., Manhattan Associates and Pegasystems go up and down completely randomly.

Pair Corralation between Manhattan Associates and Pegasystems

Given the investment horizon of 90 days Manhattan Associates is expected to generate 1.9 times less return on investment than Pegasystems. In addition to that, Manhattan Associates is 1.04 times more volatile than Pegasystems. It trades about 0.1 of its total potential returns per unit of risk. Pegasystems is currently generating about 0.19 per unit of volatility. If you would invest  8,691  in Pegasystems on September 21, 2024 and sell it today you would earn a total of  722.00  from holding Pegasystems or generate 8.31% return on investment over 90 days.

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

Manhattan Associates  vs.  Pegasystems

Manhattan Associates

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Manhattan Associates are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Manhattan Associates is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pegasystems

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pegasystems are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, Pegasystems sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Manhattan Associates and Pegasystems

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

The idea behind Manhattan Associates and Pegasystems 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.