Correlation Between Meridianlink and PTC

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

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

Diversification Opportunities for Meridianlink and PTC

0.41

Correlation Coefficient

Meridianlink  PTC

Very weak diversification

The 3 months correlation between Meridianlink and PTC is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Meridianlink and PTC Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTC Inc and Meridianlink 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 Meridianlink are associated (or correlated) with PTC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTC Inc has no effect on the direction of Meridianlink i.e., Meridianlink and PTC go up and down completely randomly.

Pair Corralation between Meridianlink and PTC

Given the investment horizon of 90 days Meridianlink is expected to generate 1.36 times more return on investment than PTC. However, Meridianlink is 1.36 times more volatile than PTC Inc. It trades about 0.07 of its potential returns per unit of risk. PTC Inc is currently generating about 0.03 per unit of risk. If you would invest  1,800  in Meridianlink on September 20, 2024 and sell it today you would earn a total of  418.00  from holding Meridianlink or generate 23.22% return on investment over 90 days.

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

Meridianlink  vs.  PTC Inc

Meridianlink

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Meridianlink has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Meridianlink is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

PTC Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, PTC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Meridianlink and PTC

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

The idea behind Meridianlink and PTC Inc 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.