Correlation Between MondayCom and SimilarWeb

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

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

Diversification Opportunities for MondayCom and SimilarWeb

-0.35

Correlation Coefficient

MondayCom  SimilarWeb

Very good diversification

The 3 months correlation between MondayCom and SimilarWeb is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding MondayCom and SimilarWeb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SimilarWeb and MondayCom 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 MondayCom are associated (or correlated) with SimilarWeb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SimilarWeb has no effect on the direction of MondayCom i.e., MondayCom and SimilarWeb go up and down completely randomly.

Pair Corralation between MondayCom and SimilarWeb

Given the investment horizon of 90 days MondayCom is expected to generate 0.99 times more return on investment than SimilarWeb. However, MondayCom is 1.01 times less risky than SimilarWeb. It trades about 0.04 of its potential returns per unit of risk. SimilarWeb is currently generating about -0.15 per unit of risk. If you would invest  23,529  in MondayCom on December 30, 2024 and sell it today you would earn a total of  1,172  from holding MondayCom or generate 4.98% return on investment over 90 days.

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

MondayCom  vs.  SimilarWeb

MondayCom

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in MondayCom are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly conflicting fundamental indicators, MondayCom may actually be approaching a critical reversion point that can send shares even higher in April 2025.

SimilarWeb

Risk-Adjusted Performance

Very Weak

Over the last 90 days SimilarWeb has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with MondayCom and SimilarWeb

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

The idea behind MondayCom and SimilarWeb 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.