Correlation Between Meridianlink and Workday

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

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

Diversification Opportunities for Meridianlink and Workday

0.54

Correlation Coefficient

Meridianlink  Workday

Very weak diversification

The 3 months correlation between Meridianlink and Workday is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Meridianlink and Workday in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Workday 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 Workday. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Workday has no effect on the direction of Meridianlink i.e., Meridianlink and Workday go up and down completely randomly.

Pair Corralation between Meridianlink and Workday

Given the investment horizon of 90 days Meridianlink is expected to under-perform the Workday. In addition to that, Meridianlink is 1.01 times more volatile than Workday. It trades about -0.02 of its total potential returns per unit of risk. Workday is currently generating about 0.08 per unit of volatility. If you would invest  25,005  in Workday on September 13, 2024 and sell it today you would earn a total of  2,231  from holding Workday or generate 8.92% return on investment over 90 days.

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

Meridianlink  vs.  Workday

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.

Workday

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Meridianlink and Workday

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

The idea behind Meridianlink and Workday 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.